Budgeting

I suppose I should first tell you what in a generalized sense a budget is and why most people haven't got a clue how to establish or read one - let alone commit to abiding by one. Yes, that's right I used the word commit, because that's what a budget is, it's a commitment! When you decide to research a budget you are about to do one of two things, either you are determining the fixed value of a quantified whole, by listing the component parts of that whole then assessing a value for each individual component and then totaling the list and accepting that the total is the true value of the whole. Or, you are stating a total amount of funds available for a given period of time then listing the individual debits (otherwise called commitments) already assumed to be necessarily required during that time frame in question and then determining if the amount of funds available will yield a deficit or a surplus of funds.

This last description should sound quite familiar to you because it is what each of you ought to be utilizing each month to determine if you have enough money to live on for the next thirty days! By the way that part about people not having a clue how to establish or read a budget, well that's true. The overwhelming majority of Americans have no budget for their own monthly expenses or income - they just make it and spend it, make it and spend it, then assume (or pray) it'll all come out OK! So it's no wonder that ninety-five percent of all Americans are in debt when they die!

Now that's truly something to ponder. Only five percent of Americans die in the black, meaning with a surplus of cash! Now let me describe the condition you are in as a film-maker when you realize the budget you believed to be an accurate reflection of your shooting script, is in fact no such thing at all. The film budget you thought would protect you, is an extravagant collection of numbers with little relation to your script or your vision. Does the budget represent by way of camera movements, the words on the page, the actors dialogue or the schedule? It's a hard fact to bear if it has no relation to your project at all! The filmmaker's budget should provide clarity and insight, allowing for a visionary experience of a highly creative enterprise.

Film budgeting calls for nuanced interpretations, proactive by nature and design, subtle delineations and precise spot-on assumptions qualified from experience. These assessments are called assumptions because we are talking about predicting the future where people have a stake with a lot of money invested in you. Are you telling the impartial truth to justify how much they intend to make? Your film budget is, a translation from the screenplay into dollars. When a budget is developed with political impartiality, the true numbers based on integrity, it is a pure reflection of the derived creative work. It should be therefore, a real blueprint of what will be required to manifest the script in film-making business terms. A film budget is an abridgment between the writer's vision and the director's raw, uncut footage.The derivation by series of refined assessments and projections, which when properly accumulated and articulated, allows for every detail of the final script to be executed with the best, uncompromised production value we see on screen.

Budgets are matrixed between numerous categories and sub-categories, all of which must be balanced in ratio within specific categories as well as balanced in ratio to the whole. Every script is unique and therefore so is each film budget, despite having structural similarities to other film budgets they are all unique. Before you can shave it down to a lesser amount or increment a budget you must first apply and derive the true translation in contemporary terms. Developing and building a budget requires a great depth of prior experience in the production of filmed media, but this alone is not enough, it also requires a particular sense about the world, an ability to grasp abstract concepts, not the least of which is to assess how long it will take for a series of event to occur and how much it will cost to go from nothing to something.

In the hands of someone who is fluent in the language of film production, a budget is a topographical map, an engineering blueprint and a clear set of instructions all in one. Unfortunately, many budgets are either developed or more likely later revised by committee, with a political corporate agenda, in other words heavily influenced by non-creative people whose intentions (usually myopic) are highly suspect and whose input can effectively sabotage an otherwise successful production!

Do you need help creating a monthly budget that works? Just follow the seven tips below and you will be well on your way to creating a working monthly budget.

Tip #1 - Know Where You Are - It is important to know where you are financially before you create a month budget. This process includes documenting all your income sources, what you think you spend on expenses each month, and listing all your creditors and the debt that is owed to them. By doing these three things you will get a better understanding of where your finances stand.

Tip #2 - Track you spending - Tracking your spending for 30 days before creating a budget will give you the concrete numbers of how much you spend in each expense category every month. Many people are surprised to see how all the little purchases at up at the end of the month. By knowing how much you typically spend in each expense category you can now plan those expenses for the next month in your budget.

Tip #3 - Plan for periodic expenses - When creating a monthly budget that actually works you will need to plan ahead for periodic expenses such as car insurance (if not paid monthly), yearly car registration, gift giving, school shopping, and insurance deductibles just to name a few. If you estimate these expenses for the year and then divide by 12 you will get an amount that you can save each month for these expenses.

Tip #4 - Allow for Savings - It is always a great idea to plan to save a certain amount of money each month. This can be the beginning of an emergency fund so when unexpected expenses come your way you don't have to reach for your credit card. This is an important step to getting and keeping yourself out of debt.

Tip #5 - Write Needs/Wants on a Special Worksheet - As members of your family express certain needs and wants, it is helpful to record them on a needs and wants worksheet. This will help to spend money wisely as it becomes available instead of make impulse buys and forgetting what you really wanted or needed.

Tip #6 - Use the Right Worksheets - When creating a budget it is helpful to use the worksheets that will have all the information you need to make a working budget. These worksheets should include a way to track spending, your repayment of debt, a monthly financial report and a monthly budget worksheet. These worksheets will make it easy for you to see all the information you need to create a working budget and show you expense categories you can adjust to make a balanced budget.

Tip #7 - Allow Yourself Some Mad Money - The best tip you can have when creating a monthly budget is to allow some mad money for yourself and spouse in the budget. This is the number one reason most budgets fail and people do not continue using a monthly budget. The resentment of not being able to spend any money makes people frustrated and then they stop tracking their spending all together. If you allow yourself and your spouse even a small amount of money to be spent on anything you wish without having to confer with the other person, your budget will have a much better chance of being successful. If money is tight just allowing a very small amount will help keep the resentment at bay.

Budgeting money is something of a neglected necessity in the modern world, with so many people lured into spending regardless of their financial situation. It has become almost the norm to spend each month more than is earned, often without even knowing it. This has led to severe debt problems for millions of people in the US and UK in particular, and an encouragement and acceptance of ignorance in personal money management.

Despite all the bad debt write offs, the banks and other lenders are happy with the situation. They build the risk factor of bad debts into their interest rates to ensure overall profitability, so borrowers are paying for the collective lack of ability to budget properly. Yet, budgeting is easy, so it is baffling in some ways that many people are unsure how to budget money.

Being able to budget your own money is a bit more than listing your incomings and outgoings each month, quarter, year, or whatever period you need to budget for. Yes, you must go through the listing process, and then keep an eye on both sides of the equation constantly. But there are other factors in home budgeting, and that is what this article is about.

The Greatest Incentive

To encourage yourself to budget money is important, as without the motivation, you will probably not budget that well. What incentive can there be to having a home budget and sticking to it? The answer is actually quite simple. Nobody becomes rich by spending more, or even the same, each month than they receive. Wealth grows from surplus; that is, the surplus left over at the end of the month after you have completed your spending.

Recognizing this can provide you with a kick start in wanting to learn how to budget money, and then put that learning into practice. Once you start to see those surpluses build, your confidence in wealth building, and incentive in budgeting, will grow.

Keeping Detached

It is important when budgeting to maintain a detached view of the figures. Think of yourself as a finance professional helping a consumer set and manage a home budget, and set yourself aside from any emotions that may seep out during a review of your budget. Some parts of the budget can arouse emotions, and thus distort sensible decisions. Things like cutting out a family holiday or weekend trips, that new bike for your son or designer outfit for your daughter, can be emotional sparks. It is important not to allow those sparks to set light to your well drafted budget.

Be Open

If you have a family, the household budget affects those closest to you. The budget is a family affair, and it does help to talk openly about it with your spouse and children who are old enough to understand. Children may not like sacrifices, but they will understand eventually. It can be an important part of their education if you involve them. If you can give them some incentive, too, such as building their own savings scheme into the budget, then they may even start to enjoy it and truly see the benefits.

Ignore Peer Pressures

Your personal budget is simply that, personal. It is therefore something you should see in the context of your own circumstances, not somebody else's.

To budget your money effectively you really need to be able to ignore peer pressures that may force you into unnecessary or unwise spending. Just because your neighbour or best friend is having two foreign holidays this year does not mean you need to also. Just because your brother or other relative has a new home cinema system does not mean it is essential for you too.

If you can let peer pressure run off you, like water off a duck's back, then you have made a big breakthrough in learning how to budget money.

Those are just a few of the other factors that come into play in learning how to budget at home, but they are all worth considering as you focus on your incomings and outgoings while home budgeting.

There can be little doubt that budgeting is a really useful way to plan and control your expenditure, but the reality of actually putting it into practice is often so daunting that we just never even start. There is a tendency to think of budgeting as a painful kind of rationing, making yourself go short of things you want and not being able to spend any money. In fact this is not the case at all. Good budgeting is just a way of reorganising your finances, so that you can get the most out of the income you do have. If you get it right, proper budgeting means you can actually identify where you are spending money that you don't really want to, and you can then save money and divert it to the things you thought you couldn't afford.

In the absence of some guidelines on how to prepare a budget, not being quite sure where to start can be enough to prevent people from getting to grips with household budgeting. There are two distinct elements to budgeting. The first is the preparation of an initial financial statement detailing all your income and expenditure, which will give you a clear picture of your current situation. You then use this to identify the areas where your spending is not how you want it to be, and set a budget for your future spending. That can sound bad enough to many people, but the tricky part is then actually sticking to that budget by monitoring what you spend every day.

How to prepare a budget

If you want to prepare a personal budget manually, there are household budget forms online that you can download free of charge. These will help to guide you through the process and ensure that you do not miss out any areas of income or expenditure. While you can then use such forms to set a monthly budget for yourself, it is up to you to work out how you monitor and record your daily spending and measure it against your budget.

How Home Budgeting Software Can Help

The reason home budgeting software tools are so popular is that they make the difficult job of budgeting so much easier. The basic principles are exactly the same as for a manual budget, but a good budgeting tool will guide you through the process of entering your initial information, then make it very easy to identify the areas where savings can be made and where you need to change your spending pattern. The big advantage, though, is in the ongoing monitoring and measuring of your spending, which can be a real challenge to do properly without a budgeting software tool.

When selecting home budgeting software, it is a good idea to go for something that has either a free trial period or a policy where you can get your money back if you don't like it. That way you have no risk and can make sure it really is the best option for your circumstances. There are lots of home budgeting software packages out there, but you may find that some of them are actually more sophisticated (and expensive) than you require. Some have the facility to deal with lots of different accounts, stocks and shares and all sorts of things, which for many of us are not really what we need the tool for.

You don't want to pay for lots of functions that you are never going to use, so go for a modestly priced, straightforward product. You also want a home budgeting tool that you will be happy to use regularly, so make sure you find one that is user friendly and not over-complicated.

Too many small businesses operate without budgets. And many small businesses that do have budgets aren't getting as much out of them as they could. We've seen it time and again.

It isn't because the mechanics are difficult to manage. Everyone knows the basics of how budgets work: you track money coming in, you track money going out, and you do your best to plan for the future. In fact, the very simplicity of that formula is what leads some small-business owners to consider budgets not worth the trouble.

Therefore, what we'll discuss here isn't what budgeting entails, because if you don't already know that, you can find it out with ease. We're more interested in why you should budget in the first place. Our suggestion, to put it plainly, is that budgeting is a way to amplify the very creativity and adaptability that allow small businesses to thrive.

Budgets' Reputation

You don't become an entrepreneur because you have a burning love of spreadsheets. At least, not usually. Being an entrepreneur isn't supposed to be about budgeting. It isn't supposed to be about paging through endless columns of variable costs or putting caps on spending. It's supposed to be about having the freedom to blend innovation and risk-taking with passion and expertise. It's supposed to be about removing barriers, not building them.

That being the case, small-business owners often see budgets as antithetical to the very spirit of entrepreneurship. According to this perspective, budgets impose stifling limitations. They're artifacts of mega-corporate culture devised by clammy-handed people in windowless rooms with poor lighting. They may be necessary evils for sprawling, inhuman conglomerates, but when it comes to organizations that rely on individual personalities and individual decision-making, budgets are more burdensome than helpful.

You might say the constraints imposed by budgeting make small businesses less nimble. Since nimbleness is one of their main advantages over larger rivals, budgets actually decrease small businesses' ability to compete.

Or so the story goes.

Some of it is accurate. For instance, it's true that passion and innovation go hand in hand with entrepreneurship. It's true that small businesses should strive to leverage their size into a competitive advantage. And it's true that budgeting for small businesses is much different from budgeting for colossal corporations.

What's not true is that budgets impose constraints. Budgets don't actually impose anything. They merely describe constraints that are already present. Perhaps more importantly, they describe a business's ability to cope with and even manipulate constraints placed on it by forces internal and external.

Constraints and Entrepreneurial Creativity

If you're an entrepreneur, you're aware that your business doesn't operate in a vacuum. It's part of a staggeringly complex system. For instance, you have your relatively immediate concerns, such as your employees and your local government. You also have your relatively big-picture concerns, such as national debt and foreign trade policy. No matter what, when you start a small business you're going to be hemmed in by laws, regulations, and unavoidable economic realities, all of which will have a major impact on how you operate.

In other words, no small business starts out in a position of unfettered freedom. The very conditions that allow small businesses to exist also impose a variety of constraints. Working capital, interest rates, the minimum wage, the minimum competitive salary for professional employees-there are countless factors that limit what you can do and how much money it takes to do it.

You can acknowledge the reality of these factors, but if you don't have a budget, then you might not know the exact ways they're affecting you. What particular constraints does a business in your industry have to deal with? Are there some that have a disproportionate impact on you because of the way your business functions? Can you make changes to reduce their impact? Are there constraints that you handle in an especially productive way? Can you turn this productivity into an advantage over your competitors? Do you approach some constraints the way everyone else does, even though you could be doing a better job with them?

These are the sort of questions a budget helps you answer. It doesn't create limitations that weren't there before. Rather, it gives you a way to assess the pre-existing limitations that every small business in your industry has to deal with. The more thorough your assessment of those limitations, the greater your ability to work within them, work around them, or in some cases, make them work for you.

Making limitations work for you is where entrepreneurial creativity comes into play. If you have enough details on your business's limitations, then you'll be better able to turn those limitations into innovations. A budget will help you marshal your creative energies and find the opportunities for profit embedded in the market's constraints. It tells you exactly what assets you have to work with, and helps you map out how those assets can be put to the most productive use given the rules of the industry.

After all, most of the market-based constraints you experience will be shared by your competitors, who also have limited amounts of money and freedom. Which of you comes out on top won't be determined by who has the fewest constraints, but by who does the best job of manipulating common constraints to find the possibilities they hide.

Speed, Spontaneity, and Profit

Small businesses, precisely because they're small, tend to be better than their larger competitors at taking quick, decisive action. It's one of their vital advantages. By the same token, it's one of the challenges that all entrepreneurs are bound to face. You'll be forced to react on a moment's notice to emerging opportunities or perils in the market-that's a given.

What's less certain is the profitability of your reactions. Obviously, acting or adapting fast doesn't do much good if it yields a loss.

So what information will you use to make your quick decisions? Do you have a detailed, practical breakdown of your business's strengths and weaknesses? Do you know exactly how many resources you can afford to redeploy at a moment's notice? Do you know how efficiently different aspects of your business tend to use the resources you devote to them? Are certain aspects of your business already strained? Are certain aspects flush with the potential for expansion?

A budget gives you a diagnostic readout of your organization. It tells you how much stress the business can handle and which areas can handle it. Hence, it helps you decide whether acting conservatively or aggressively in the short term will enhance your performance over the long term. Without a budget, you'll be relying too much on guesswork, and many of your quick decisions may be needlessly risky.

Supply-chain Relationships

A budget not only helps you assess yourself, but also helps you assess your relationships with other entities, like vendors and subcontractors. This will be especially important when the market is in flux.

As you know, successful entrepreneurship entails evaluating the vast array of forces that constitutes the market and determining where-for someone in your industry, someone with your passion and expertise-the opportunities and roadblocks lie. But no one can predict with any certainty how the market will behave tomorrow. There will be surprises. Sudden chances and sudden setbacks.

We've already noted that the way you respond to these inevitable surprises will play a critical role in the profitability-or survival-of your business, and that your ability to make the right call at the right time will be drastically greater if you have a budget in place. This is not only because a budget tells you about your own resources, but also because a budget helps you deal with other organizations that affect you.

Let's say you experience a sharp increase in demand for your product. It's good news, but it brings up questions: Do you have enough working capital to provide your product to a large number of new customers/clients? What are the current resources of each division of your business? How many more resources does each division need if it's going to ramp up its activities? How efficiently does each division tend to use its resources?

These are all internal questions that may well lead to others, such as: What do your vendor accounts look like? How much new inventory can you afford to purchase? What type of sales will you need if you're going to pay off the new purchases on time? Can you afford to hire subcontractors to help with the push?

And, of equal or greater importance: What's your plan for a downturn in demand? Will you find yourself in a precarious position with your vendors? Will you be able to keep promises to new customers? Will you be able to pay your subcontractors for the hours they've put in?

Indeed, budgeting can provide invaluable support for all your relationships. As noted on Inc.com, "your suppliers are in all likelihood mapping out their expectations for the year and you can help them do so by providing your outlook. As a best practice, you should share your budget and the variety of scenarios you might face to see whether they can handle each level of demand" (Field 2010).

Since your business is one element in a network of other businesses, it's important for you to be able to communicate both your capacities and your expectations to the people you rely on. A budget serves as a tool for facilitating such communication. It gives you a concrete way of describing not only where you stand, but also where you will stand in a given scenario. Thus, it helps foster strong partnerships and avoid uncomfortable conversations.

This doesn't mean sharing every detail of your budget, nor does it mean sharing some details with everyone. It simply means that guarding your budget like a state secret takes away some of its efficacy. You can use select portions of your budget to assist you in negotiating with critical partners-i.e., you can be prudent about the information you divulge without being obscure. How much do your current business partners know about your budget? Is it enough for them to understand your capacities and your needs?

The Bank

Speaking of business relationships: you don't want to mess around with the bank. Plain and simple. This is a relationship that should be as friendly and open as possible. And what do bankers like? Budgets. As the American Bankers Association (ABA) says, "You are flying in the dark financially if you don't have a budget for all income and expenses."

Come to them without a budget, and bankers are going to feel like you're wasting their time. They're certainly not going to be interested in loaning you money (or more money). "Prepare for your financial review with your banker," says ABA. "Have current inventories, cash flows and balance sheets ready."

When your banker asks you how your debt is structured, and whether you have an imbalance between long- and short-term debt, what are you going answer? Trust us: if you show up to that meeting with a budget, you'll be glad you did.

Flexibility

Just as the market's unpredictability makes budgets useful, it also makes them fallible. A budget is like any plan: it will contain inaccurate predictions and require ongoing revision. That's simply a condition of commerce; some academic models are predicated on entrepreneurs having perfect foresight, but we all know that's not the case. Businesspeople, even the world's most celebrated financial prognosticators, get it wrong sometimes.

That doesn't render planning completely useless. Even if your plans don't entirely match the way reality unfolds, they serve as benchmarks against which you can assess your progress. They record where you wanted to go, where you actually went, and why the two didn't coincide. In that way, they indicate which areas of your business are performing well, and which need to be modified in order to meet next quarter's goals.

When it comes to small-business planning, certainty is off the table. Nothing is guaranteed, including budgets. But setting expectations and monitoring progress remain indispensable to long-term survival. They help small-business owners analyze why they're drifting off course, and also help them formulate corrective measures.

How do you see a budget? As a static report that turns old news into flimsy predictions? Or as a series of living documents that records how you adapt to change?

Personnel

Thorough budgeting calls for a great deal of effort, and many small-business owners can't spare the necessary time or energy. Frankly, while the minutiae of budgeting are of interest to the entrepreneur, they are not the entrepreneur's main job. If they were, then a good head for numbers and a background in financial analysis would be prerequisites for entrepreneurship. Yet plenty of small-business owners have succeeded without an affinity for mathematics or statistics. Entrepreneurs don't all begin as certified public accountants.

That being the case, most small-business owners hire a bookkeeper. A bookkeeper collects and organizes your financial information, which, again, is time-consuming and requires close attention to detail. Too much time and too much attention for small-business owners to sacrifice. But even if you're not involved with gathering and sorting your financial information, you needn't remain aloof from it. To get the most benefit from budgeting, you'll want to be accustomed to reading your financial statements and locating important data in your financial system. When you meet with your bookkeeper, are you talking about his or her methods? Is he or she showing you how your financial information is organized? Are you able to navigate your bookkeeping software on your own, so as to pull up specific pieces of data without your bookkeeper's assistance?

Proper bookkeeping is important, but it rarely goes far enough in the analysis department. You'll notice that the bulk of our discussion has revolved around using budgets to orient yourself in the market-i.e., using them to take advantage of opportunities and to minimize risks. That requires more than tabulating numbers; it requires interpreting them. It requires fitting your numbers into a larger picture.

Is there anyone in your organization besides you who (1) monitors your finances on the close-in, detailed level, and (2) relates the details of your finances to your big-picture performance? If not, chances are you'd benefit from a dedicated financial person. Someone whose duties involve painting a comprehensive picture of your financial universe-more comprehensive, that is, than the picture you're able to paint on your own, simply because you have other things to do.

As with most aspects of running a small business, getting the most out of budgeting requires skillful delegation. If a budget is going to inform your decisions at major turning points, then it's a good idea to have someone to consult with, someone who's been looking at the same numbers as you while also looking at the same problems.

Takeaway

The value of a budget doesn't rest on the accuracy of its predictions or the stringency of its cost-cutting. Instead, the value of a budget rests on how well it articulates your business's financial strengths and weaknesses. A budget exists to help you balance risk against opportunity, to help you determine whether aggressive or conservative action is the right thing for the moment. It also exists to help you communicate with your business partners-to, in other words, cultivate healthy, mutually beneficial relationships with the organizations you rely on.

Above all, a budget exists to de-mystify, or express in concrete terms, the limitations imposed on your business by the market. Thorough budgeting, especially when undertaken with the right personnel, can enhance your creative initiatives and merge adaptability with profit. In short, budgeting is a way to sharpen, not blunt, a small business's advantages.

Citations

American Bankers Association. Ten tips for small business owners during tough financial times. http://www.aba.com/Press+Room/PR_Small_Business_troubledtimestips.htm.

Field, Anne. 2010. How to budget and manage inventory for 2011. Inc. http://www.inc.com/guides/2010/10/how-to-budget-and-manage-inventory-for-2011.html.

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Are you seriously considering college, or are you now attending a college to pursue a professional career? If so, you are making a very adult transition toward your own unique future path. One of the key factors to the success of this (or any) endeavor is how you will best manage your money to meet that future. Budgeting is the discipline of acting responsibly and thinking ahead with your money. All college and would be college students should use a budget to manage their lives financially.

Start Early, In Fact, Begin Now

Though you can/should start even if you are already well into your college career, it's best to start much earlier and progress through three phases; junior/senior years of high school, freshman/sophomore years of college and junior/senior years of college.

While Still in High School

If still in high school, start earning and setting aside money for college right now. It's never to early to start learning that college costs money and that you, the student, is ultimately responsible for paying for college.

A great first exercise is to start a three-month journal of your expenditures that capture all monies spent under two headings; needs and wants. Make note of the needs you spend money on like gas verses the wants like fast food where money is spent. While it's true college life will be very different from your home life in high school, your habits will largely stay the same until you notice them and make proactive decisions to change them. After three full months, sit down and review the your expenditures for misalignment with your current priorities, then talk with others who've been there and make a best guess what your priorities in college will likely be and how your expenditures should change to meet those. If you've had the time to do this before you plan and execute your formal budget, your budgeting will be much more effective.

Now is also the time to do a lot of research on the income side of you budget. Learn about every possible grant and loan you may have available to you as well as what better paying part-time jobs you might apply for at home and in your college town. Of course, it is vital to learn about all the tuition, living and student costs for your chosen colleges to plan for your mainline college life expenditures as well. Finally, with the help of a parent or trusted adult its time to research and set up all the bank, debit card and yes, even credit card accounts you will need to go on to school. It's important to realize the debt plays an important role in financing and managing college, because much, if not most of the money being spent will be borrowed. That means the student must realize that they'll be paying all that borrowed money back and squandering money is not an option. Armed with this information you will be able to plan your upcoming life transition and make a valid budget for your college career.

Entering College

During the first two years of college use a formal budgeting process using a budgeting worksheet for money management that meets established priorities as well as accounts for actual income/financial aid and expenditures.

Since grants and loans may be awarded by school year or term, divide the total income by the number of months to arrive at a budgeted monthly income. In fact, a best practice is divide this further down into weekly chucks to gain even more control over the process. Then work out the expenditures side of the budget by accounting for all term-related costs like room/board and books, all monthly costs like rent, utilities and finally all weekly costs like food, toiletries, going out, etc. It's very important to assign actual amounts to each and do a running follow-up of at least two-time periods back to check for plan-to-actual assessment. The keys to making the best budget are the accuracy of the amounts assigned to every item in the budget and accounting for even the smallest items/expenditures. The very best budgets also set aside some money that you put into a savings account to reward yourself with something fun. If anything is too expensive to fit in your normal set aside amount, just save money for each of the specific items you want and get them. But as a young adult, you should save an amount, however small, just for the future and your responsible budget must now include monies set aside for unexpected emergencies such as car repairs. If you don't use the emergency funds, that's just more savings you have for the future.

With any budget, it is vital to set a standard day in a week, a month and in the school term to record the expenses, account for the income and 'do the math.' Take that time to look at your checkbook, bank statements, wadded up receipts in your pocket or your desk drawers, record everything on your budgeting worksheet and assess how you are doing regarding your financial priorities. Make a good habit of knowing your own habits - keeping track of where you spend money and how much is spent.

There are many other very good practices you may learn from others to make the most of money while you are in school. As a student you may get special banking services, discounts at stores, cards and vouchers that give you discounts. Use them all because they may increase the spending power of your money. Learn about these from your friends. Another tip is to live within the cash you have on hand. When you go out at night with friends, put only the amount of cash in your wallet that you can afford to spend and leave your debt and credit cards in a safe place back in the dorm (to avoid the common ATM temptation).

As a young adult with very grown up responsibilities regarding money, you are earning the right to be your own person. Live up to those new responsibilities!

Final Two College Years

While, the last two years of college are much like the first two and all the budgeting activities and advise are the same, a maturing adult should be mindful of their changing priorities and manage their savings to reflect those shifting priorities.

The very most impactful decisions a student is likely to make regarding their financial future revolve around career options they will be able to pursue after graduation. It's as important to be mindful of the future earning potential of a career path as it is to be aware of a career's fit to the student's aptitudes or desired work life. Whatever their career choice may be, the student must enable to repay their college loans and enable every other aspect of their financial footing/growth. Therefore to attain a promising financial future, earning potential after graduation should help guide student's choices while still in school, regarding majors, minors, classes and activities etc.

If the student intends to find a job after graduation, by the junior year, it is a good practice to begin setting aside a small amount for the transition from school to the world of work. A whole host of new expenses can be anticipated such as job search, rent, auto, etc. that may all begin at once. If the student plans to go on to graduate school, a research and evaluation exercise similar to the work done before college should take place about two years ahead. Graduate school incomes and expenditures are quite likely to be different then the undergrad experience has been and those specifics need to be planned for.

Planning and paying for college can be challenging, but it doesn't have to be overwhelming. The bottom line for those budgeting for college is; don't give up! Making a budget and sticking to it isn't always easy, but keep at it and you will be in control of your financial destiny both while in school and as you go through life.

The advent of computer changed the face of working in any organization. The readymade software has overtaken the process of making accounts on hardbound paper. Be it a large or a small organization, people with sound knowledge of computers and an aptitude to learn can become good accountants. In today's competitive business environment, the yearly planning of accounts is no longer the norm. Businesses can only survive if they have speed and agility, coupled with strategy and planning made by the management. Web-based planning and budgeting software provides streamlined budgeting, forecasting, reporting and analysis.

The budgeting software helps in unifying a single application, interface, and database, strategic planning, budgeting, forecasting, legal consolidation, reporting, analysis, predictive analytics, score carding and dashboards. The software is easy to use and employs user-friendly programs such as Excel, and a standard browser to create a flawless budget for any business.

The software helps empower the organizations to plan, analyze and adapt in real time, for better business performance. These IT scripts also help in combining real-time alerting, multi-dimensional analysis, business workflow management and web-based collaboration in a single platform.

Some of the software, such as OutlookSoft Everest 4.2, also helps in making functional graphs, while complementing the numbers. The software also provides some unique features, such as indicators supporting the executive information system concepts and radar display tools.

This software also helps managers eliminate outdated, hard-to-manage, spreadsheet-based budgets. With multi-dimensional technology, managers can move beyond the limitations of spreadsheets. Financial planning and budgeting software, such as Host Budget, can easily integrate with general ledger and other applications by importing data or using seamless adapters to industry leading applications.

With hoards of software available in the market and on the Internet, one needs to look for details that would make the budgeting statements accurately and flawlessly.

If you were thinking of trying your hand at blogging to attempt to generate an e-based income you will need to acquire budget hosting solutions first in order to do so. Without a budget hosting account and a domain name for your blog site you may find yourself over budget and unable to afford your hosting fees. One should definitely take the time to educate themselves on the wide variety of web hosting solutions and what they could be missing out on by acquiring a more affordable web host.

The more costly and service filled web hosting available to you today is known as dedicated website hosting. This is a very high priced hosting solution typically used by large e-commerce sites. This is due to the security provided by renting your own private server. With monthly fees as high as $150 this is definitely not a low cost or budget hosting solution for those of us looking to save a little money on hosting.

The next website hosting service down the line can be considered budget hosting. This depends directly on your overall budget though. This type of hosting solution is known as VPS (virtual private server) hosting and is so called because it is a shared partitioned server which creates a virtual private space for your website. And while you may not have the whole server to yourself it will still offer you the same basic features as a dedicated hosting package without the budget wrecking monthly fees.

The best thing about a VPS hosting package is the similarities to dedicated hosting with budget hosting plans starting at less than $10 a month. As your website or blog grows in popularity and traffic you can expand tour VPS services to as high as $100 a month to help accommodate this new growth. This is how VPS hosting can allow you to shrink your overhead while expanding your profit margins and hosting account accordingly.

And last but not least, we find ourselves looking toward the cheapest available hosting solution you can find today. This is the budget hosting solution employed by most bloggers today. It is known as shared website hosting and is so called due to the fact that your website shares a server with multiple other websites being hosted on the same server. You may however find it is less secure and has a greater chance of downtime than dedicated or VPS hosting does. While many argue that shared web hosting is less secure, it is simply a more affordable hosting solution for your budget to bare.

You can find these shared web hosting solutions for as little as $3-$20 a month in many cases. This is dependent entirely on the level of service you choose from the website hosting firm you decide upon. The higher cost shared hosting packages do offer you an increased level of security and the ability to host more domain names to boot!

And if you like many of us these days are on a budget, you want to be sure your blog hosting solutions are the best they can be for the price you can afford. Listed below are five helpful tips to help guide you through the process of finding the best budget hosting for your blog or e-commerce website. As a blogger your success is dependent on a budget web host with reliable services, and a low overhead is a solid business strategy for any online business.

The Top Five Tips for Finding Budget Hosting Packages

1. Make and stick to an attainable budget

The most important thing to account for is the amount you can afford to dedicate to your monthly hosting budget. Keep in mind that you will have to pay around $12 for your domain name for the first year and may even need to spend a little on some design and creation tools for your web site. And be very sure of what you think you can part with monthly for your hosting package before you go any further.

2. Find a top hosting firm's comparison list for reference material

There is definitely no lacking of websites dedicated to showcasing the top ten web hosting firms in their opinion. These types of websites can be a valuable resource in your search for budget hosting solutions for your blog. The top hosting firms are usually the most capable of rendering high quality services with a minimal impact on your budget. And though it may be a cheap hosting service it will still be a viable and reliable solution for your blog.

3. Narrow the scope of your search through review sites

Different web hosting reviews are usually found on the same sites as top 10 hosting comparison sites. Top 10 hosting reviews can make all the difference in your quest for hosting solutions for your blog. You should take the time to read multiple reviews to become more familiar with what is offered in the different types of hosting offer the end user. These are a few of the more reputable and reliable hosting reviews today: BlueHost review, JustHost review, GreenGeeks hosting review, FatCow review, HostMonster review, iPage review, and InMotion hosting review.

4. Put the customer support to the test

Customer support should be rapid, reliable and readily available. These are all the hallmarks of a reliable web host with quality web servers. The support test should also be reserved for the few firms you find to be the most appealing and affordable. This will assist you in deciding which hosting firm offers the best budget hosting for your particular needs and requirements.

5. A side by side comparison says it all

After assuring the support meets your quality requirements you may only be left with one or two firms to choose from. And now that you have all of the costs, web reviews, benefits and features in one place you can compare them side by side. A side by side comparison of these features and options can help you separate the viable hosting firms from the less than desirable firms.

The Final Approach To Budget Hosting

If in fact you are dead set on blogging and want to be sure you have a solid business foundation then it is recommended you acquire a VPS hosting plan from the start. You could start out with the lower cost, $10 a month budget hosting package and grow your hosting plan as your website or blog grows in popularity. This is one of the best options for those of us who wish for or expect rapid growth and want to be able to maintain our blog through it all.

Ultimately, if you feel you will not outgrow your shared hosting account then you may do just fine with a shared hosting account. You will want to be sure however, that the shared hosting plan you choose allows you to host unlimited domain names as well as a little more security than the rest of the web hosts out there.

While choosing the right hosting solutions for your budget may not be easy, it will definitely be worth the time you spent researching. And to insure your success, be sure to avoid the entanglements found in the world of free web hosting and get the solutions your budget can afford. So be sure to use these tips and guidelines when you seek out budget hosting solutions for your blog or website.

One of the privileges of living in this day and age is that almost anyone can travel to almost anywhere in the world in a matter of hours. No longer is it a privilege reserved for the rich and famous as airlines continue lowering their prices to maintain their competitive edge. Nonetheless travelling can often be highly stressful as we are making a leap out of our comfort zones and into the unknown. Questions race through our mind. Will anyone there understand me? Have I planned enough? Can I afford it?

This article shall go over some of the main things you should and should not do if you intend to travel on a budget. This list is not meant to be definitive, but rather to outline some basic steps that one can take to make their budget travel as stress free as possible. We shall be focusing mainly within the context of international travel, though many of these tips could readily apply to shorter day trips.

Do plan a daily budget.

This one is simple really, yet it is amazing how many people don't do it. For me, the easiest way to plan a daily budget is to first ask how much you are planning to spend overall. From this deduct the transportation costs and accommodation (more on this later). Then divide what is left by the number of days you are planning on going away.

For example, lets say I was going to London for 10 days. I planned to do it with £2500 overall. My airfare costs £600, while my accommodation will cost £120 per night (London isn't cheap). So for nine nights my accommodation equals £1080. Therefore airfare plus accommodation equals £1680. Take that away from the overall budget of £2500 and we are left with £820. Simply divide that by 10(the number of days I am in London) and you have £82 as your daily budget. For a single person this is substantial. For two or more people the same rule applies if you are budgeting together, except you need to allow for roughly twice as much for your daily budget, not to mention your other expenses will be roughly twice as high.

Do keep track of your daily spending.

So you have a daily budget. Well a budget is absolutely useless if you don't apply it. Simply take a notebook and pen with you wherever you go and write down every expense that you incur, no matter how small. The fact that while you are travelling, you will often use a credit card or cash, means that your spending can quickly get away on you. By recording your spending by hand you can easily avoid this. It will soon become a habit so do not go anywhere without your notebook.

Another excellent thing about such a recording system is you can carry what you don't spend onto later days. Say for example, on my first day in London I am £36 under my budget. Then with nine days left it means I have an extra £4 a day (£36/9 days = £4). On the other hand, if I go £36 over budget on the first day, I can work out that I will have £4 less a day.

Do book all your accommodation well in advance.

This one ties into the budget once again, however there are even more practical reasons to this. Once you get to your destination, as a budget traveler the last thing you want is to run around trying to find vacant accommodation that fits your budget requirements. By booking in advance online, not only can you guarantee a place to stay upon your arrival, you can also research, find and book accommodation that suits your needs and requirements.

Do book all your major trips in advance.

By major trips I mean any intercity trips by aircraft, train, bus or boat. Basically any trip that isn't part of your destinations regional transport system. By booking in advance you can add the expenses to your transportation costs, as such large single expenses would quickly exceed your daily budget. The fact remains that buying tickets at a ticket stand may be cheaper. However, take note of the word "may" as they are often not. When travelling on a budget, you cannot afford such a gamble. Therefore get these costs dealt with as soon as possible so you know what you are getting in to.

Do research your destination.

There are many websites on the internet, where you can get information about your destination. Things that you may want to research include, what are cheap attractions, top attractions, good affordable restaurants, tourist traps, and local scams. Take special note of the last one as many major cities have running scams that, by knowing about in advance, you can easily avoid. For example, Paris has an issue with Roma asking for handouts, then snatching your wallet or camera while you are looking for change to give them.

Do not necessarily go for the cheapest option.

This ties into research. Sometimes it is better to spend that extra £20 on accommodation, when the alternative is a rat infested hell hole. Look around online for reviews of the accommodation you are considering staying at. A single exceptionally atrocious hotel is enough to put a major dent in your holiday enjoyment. Of course, don't expect 5-star hotels on a budget either.

Do not EVER avoid getting travel insurance to save money.

As was mentioned at the start of this article, when overseas you are a lot more isolated than you would be at home. Likewise, if something does go wrong, if you do not have travel insurance nobody will be there to help you. Your embassy will not fly you home free of charge if you are ill and miss your flight. At the very most your embassy, assuming there is one, will offer advice and allow you to call home. If you cannot afford travel insurance you cannot afford to travel. It's as simple as that.

Overall plan, plan and plan some more, and have fun while you are there.

The key element in all these points is planning. If you deal with anything that will likely be stressful while you are travelling well in advance, then your trip will be far more stress free, and you will spend less time worrying and more time doing the things you want to do.

Paying off your debt and becoming financially independent has many important parts. The most important of those is creating a budget. A budget gives you an outline of where your money is going and where it should go. In some instances, it can be used to create strict limits for your spending. How well you stick to the budget is up to you.

When you reach the end of your budget month, the balance for the month should be 0. Funds in - Funds out = 0. If you end up with a negative number, you've overspent and will need to adjust by reducing budgeted funds in another category or by reducing the total amount of money available for the next month. If you end up with a positive number, you've spent less than you made. Good for you! Now, put that money to good use. Pay down some debt, or put it into savings.

Here's a very simple budget set up.

Keep a simple income spreadsheet. List all the sources by name in column A. List how much each brings in in column B. And then, any notes you have for the income (like if it is temporary) in column C. You don't need to get very detailed with the income, because it only needs to be accounted for so that we can budget for it's use.

And, the incomes use is in our expenses spreadsheet. This spreadsheet will be much more complex than the income one. You'll need a field for income that you carry over from the income sheet. You'll also need a field for a total expenses budgeted for. A third field will give us the budget surplus. We get that by subtracting the budgeted amounts from the income amount. A final field will subtract the actual amount spent from the income, and will serve to tell us where we stand in our budget. If you like, you can add another field that subtracts the actual amount spent from the amount budgeted.

Here's where the expense sheet gets complex. All of your categories of spending go in column A. Get as detailed as you like, or keep it really simple and just put the basic categories. Generally, the more detail the better. it's also helpful to have categories for your categories. A Utilities category for your power, gas, water, etc, categories. Again, detail is good, but be wary of going into too much detail. Column B is where you'll put the amount that you're budgeting for that category. Column C, how much you've spent on that category to date. If you like (or are a statistics junkie) you can add columns for % of budgeted amount, and % of total budget as well. For our simple budget, we'll just leave that out for now.

You can go over your budget as often as you like. Some find it easier to enter amounts every day after they've settled in for the day. Others will choose to go over it monthly. Going over it weekly is likely where most will settle though.

Occasionally, we'll have a surplus or deficit at the end of the month. Perhaps you've spent too much, or not spent all that you thought you would. Spending too much can be troublesome, but not spending as much as you thought can be a lot of fun. You may want to consider adding a budget field carryover in the income sheet and one called shortfall in the expenses sheet. If you spent too much, the amount that you overspent by becomes your budgeted amount for shortfall in your expenses sheet the next month. Didn't spend enough, and you put that amount in the carryover field in the income sheet. This will help you keep track of all your money as well as account for any shortfalls.

With these ideas, you can create a very basic budgeting system. Tweak them around a little to fit your personal finance situation. Making and maintaining a simple budget is the first step in getting control of your financial life.

Some people just dread the idea of creating a budget. Maybe they'd rather not know how dire their situation is, or maybe the idea of having to do math puts them off.

If you're among those that don't really want to have to create a budget, it's time to change your thinking. Budgeting is a great tool to evaluate your family's spending habits, and sometimes just knowing how much you're spending on "extras" can help you to think a little more carefully before you get out the credit card.

What is a Budget?

A budget is a simple tool that you can use to list your family's cash flow. How much money is coming in? How much is going out, and on what things? Do you have a plan for future expenses, like home maintenance, vacations, your children's education, or retirement?

That's all there is to it.

Building a Budget

To build a budget for your family, without stress, just following the following steps. Before you know it, you'll be on a path to spending intelligently, and seeing the benefits as well.

1. Collect three months of pay stubs, and use them to determine your average monthly take-home pay.

2. Using paper or online bank statements, credit card statements, and your memory, look at your monthly expenses (both fixed and variable). Use 3 months of records to get an average for each category, like utilities, groceries, mortgage payment, insurance, etc.

Don't forget to include debt payments on things like lines of credit or credit cards.

3. Analyze your results. Take note of areas where you feel you spend more than is necessary, and think of ways to economize.

4. Develop a monthly budget, and try to stick to it for 2-3 months.

5. Make sure in your monthly budget, you set aside money for savings. If you don't already have one, set up a savings account to make regular deposits to.

6. After 2-3 months, revisit the monthly budget. Fine-tune any areas that you need to, update required debt payments, etc. Remember that an effective family budget is a living document.

7. If you can, consider using a budgeting software program, or a spreadsheet application to make it easier to keep a record of your spending. Or, if you prefer, try using the envelope or jar method, to limit your spending only to the amounts budgeted.

Just by using these 7 simple steps, you can develop a no-hassle budget for your family that can help you to build savings, and lead to a financially stable and secure future for you and your family.

In their book, Beyond Budgeting, Jeremy Hope and Robin Fraser highlight the inadequacy of traditional annual based budgeting and argue passionately for a new management model that can cope with the volatility of today's business environment. Their model embraces much more than just budgeting, it is more a philosophy of decentralization and a way of encouraging managers at all levels to become accountable for their performance without tying them to an annual budget straitjacket.

Hope and Fraser analysed many companies of various types that have abandoned traditional annual budgeting in favour of their new model and found that management gained a new sense of empowerment and a "can do" attitude. In addition, they benefited from faster and more adaptive decision-making, reduced bureaucracy and lower costs. The companies became more competitive and customer satisfaction improved along with many of the company's' KPI's (Key Performance Indicators).

The new model replaces annual budgeting and centralized control systems with multilevel controls that include effective governance, fast financial actuals, trend analysis, rolling forecasts, key performance indicators, performance ranking, and management by exception.

Its probably no surprise that annual budgeting is expensive and time consuming, but just how much time companies are spending on the process and how useful are the results, should be of concern to all senior executives. Hope and Fraser found that the budget process typically starts at least four months prior to the year to which it relates and grinds its way through countless meetings where managers negotiate targets and resources. An estimate of 20 to 30 percent of senior executives' and financial managers' time is absorbed in the process, while the Ford Motor Company concluded that they spend $1.2 billion per year on forecasting and budgeting.

Quite apart from the cost, the budgets this process produces are often meaningless. The forecast numbers are out of date before the budgeting round has finished. Even the numbers themselves are suspect. Having been agreed upon during countless negotiations, they are based more on politics than strategy. A manager's performance is often related to achieving targets set out in the annual budget, which inevitably leads to a conflict of interest. Managers will attempt to negotiate the lowest possible targets and avoid taking risks.

Without going into the whole management philosophy, which is covered in commendable detail in their book, the control systems clearly needed in today's volatile world must be fast and flexible to be relevant. In the companies that successfully implemented their model, Hope and Fraser say: "All our case examples use rolling forecasts in one form or another to provide a fast, high-level view of future performance".

Business expenses come even before you earn your first dollar. This is the first business consideration you have to thoroughly think about before you begin promoting your business, the expenses necessary to operate your business.

While it is true that you have to think of business expense ahead of everything and therefore budget for it in advance, this is an ongoing process you have to include in your operations.

You may set up an Expense Budget for a month, a quarter or annual. You have to ensure that you are able to budget it well to ensure that your business operations is directed into ensuring return on investment in every business endeavor you make.

Because of this, you have to create an Expense Budget and monitor it well. To help you, Excel has an Expense Budget Template you can take advantage of.

You may create your own template complete with logo and color scheme of your company but to start the process, you can download the Excel Expense Budget Template to have an idea of the important details necessary for this budgeting process.

What are the details necessary for the Expense Budget Template?

Expense budgets contain two important sections: Personnel Section and Operating Section.

In the Personnel Expense Budget Section include the salaries for the following:

o Office Personnel
o Store Personnel
o Sales People
o Other personnel necessary in the operations.

Ideally, you budget expenses for a quarter in the personnel expense budget. This is for the first three months of operations where you are not expecting profits to come in as yet.

You may have receivables during the first few months of operations but they may need to be earmarked for other operating expenses and thus your budget needs to be sufficient for the first quarter.

Even if you are budgeting for the year and is already in full operations budgeting for three months is still a good rule of thumb.

If you are already comfortable with your budgeting and timing of receivables, only then can you budget two months for personnel expense budget.

In the Operating Expense Budget Section otherwise called OPEX, the details you may include are the following:

o Advertising Costs
o Delivery Costs
o Other Employee Benefits
o Insurance
o Interests
o Office Supplies
o Postage
o Maintenance and repairs
o Telephone and other utilities
o Rent and mortgage
o Taxes

There are other operating expenses you encounter and you have to put all of them in the template. Budgeting on a per period basis is likewise necessary herewith. If you are already in operation for a while, you must review the average periodical expenses and budget for operating expenses accordingly.

Based on your average monthly or quarterly operating expenses, budget two period when necessary. If this is not possible, use the average based on the past 3 months or three quarters. Ensure that you pickup the highest period cost to ensure that your budgeting is enough to cover any spike on your costs.

Another important item in the Expense Budget Template is the actual based on the period of your budgeting.

By reviewing the budget against the actual expense you are able to see the accuracy of your budgeting and thus will be able to cover all expenses necessary for the business operations without delay.

You may have a printer create an Expense Budget sheet but an electronic monitoring may likewise be necessary. If you keep your expense budget template on your computer, you will easily review them and analyze them properly.

You will then be on top of your business with the help of Expense Budget Template. Excel has it available for download if you want.

The Basics As I outlined in my previous article on budgeting (see, my other articles on Ezine Aticles), setting the budget is relatively easy, sticking to the budget is the tough stuff.

It is a bit like going on a diet I suppose. The thing about being on a diet is you are always thinking about the things you cannot have rather than the things you can have. So it is not surprising that most people go off the rails when dieting - that cream cake was just too tempting this time.

In just the same way, if you have set a budget and put some cash in the bank to pay for it later, it will always be tempting to spend next month's money today i.e. to go off the rails. Sticking to budgets is hard when you have been loose with money to date, but you have to do it - there is no choice.

Think of it this way. If you stick to the budget, things will steadily get better; if you do not then things will quickly get a lot worse. It is one incentive at least.

The principle is outlined clearly by Mr Micawber in Charles Dickens' David Copperfield:

"if a man had twenty pounds a-year for his income, and spent nineteen pounds nineteen shillings and sixpence, he would be happy, but .. if he spent twenty pounds one he would be miserable" The quote is famous, what is not so famous is that having said this Micawber then borrows money off David Copperfield for a drink then gives him an IOU in his wife's name.

So just knowing what to do is not enough - the principles have to be followed.

Planning for Success The principle here is very simple: failure to plan is planning to fail.

Clearly, you can deduce from this, the one thing that blows the budget time and time again is thoughtless, or unplanned, shopping. If it is food shopping then going to the shop without a plan, without a pre-established list is a recipe for failure.

Recent reports have suggested that one in six people now discards more than 10 per cent of their average weekly groceries shopping because the goods are either past their sell-by date or are no longer fresh. Salad and fresh vegetables are the most likely items to be thrown away. This is of course the result of not thinking through your weekly purchases and planning to use what you buy before you need to throw it out.

For example, when putting together your weekly food shopping list, plan the list around daily meals for the coming week and involve everyone. If you live with a family, or just a partner, everyone implicated in the budget has to be involved. It then becomes much less of a fight and strangely enough can be a very positive experience being something that you can all do together - not to mention a subject of much heated debate.

You need to know the price of things in the shop. Do not buy on the basis of it looking nice, look at the price and assess the value for money: the value to you. Get to know the prices of things so you can estimate spending before you go in the shop.

The key is in fact value for money, this is not necessarily about buying the cheapest option it is about value to you and if buying two food items today reduces your overall spend over two weeks - then spend more today and buy two to save money for next week.

Enough about food shopping, I will be covering it again in a later article along with another on assessing the value of purchases.

Focussed Shopping (not grazing) The other substantial risk to budget adherence is of course non food shopping. The advice here is simple - give it up. This is very much a man / woman thing. Men generally will not take too much persuading to give up shopping, for women however browsing in shopping malls is a pleasant pass time and a good opportunity to pick up some great bargains in the sales (because we are cutting back aren't we?).

Unfortunately the truth is that even the best bargain is expenditure nonetheless. If you have run up debt as a result of past spending sprees you may not need to spend money on clothes for at least a year. So don't! Buy what you 'need' only and go directly to the shop you need to buy it from, buy it, then leave the shop and the mall (if applicable).

Do Something Else There are pastimes, other than shopping, which do not require expenditure and you should look them up - they will keep you occupied, stop you thinking about all of the things you do not have and save you a fortune.

I will be covering this in more detail in a later article, but consider this: if you live near the seaside (in the UK you are never more than 75 miles from the sea), taking the kids to the seaside for a picnic will cost next to nothing, but will keep the whole family occupied for a day. However, make sure you pre-plan the day and take everything you need with you, bought at supermarket prices - not at local tourist shop rates.

Review & Revise Another general principle in all of this is to be constantly aware of the budget that has been set and to constantly review set figures and performance. If you have changed insurance providers to reduce costs make sure you review it again next time it comes up for renewal (normally every year). Equally gas and electric consumption can be reduced and you should resist the siren call of direct debit and standing orders. Sometimes discounts can be obtained by using direct debit and it is difficult to argue against that, but service providers (e.g. gas / electric) can make mistakes and with direct debits you then have to get the money back after they have made the mistake and the money is with them. Remember 9 tenths of the civil law is possession.

In particular, not using automatic payments will stop you going overdrawn by mistake and will make you focus every month on each individual item of expenditure and make you think about ways of reducing it further. Discuss this with your partner at least once a month and maintain a continual focus on your money and where it is going. An annoying and painful process I know, but one of the secrets of successfully sticking to your budget nonetheless.

Reward This is all very miserable stuff really. It is like outlining a manifesto to be miserable, a new stoic philosophy along the lines of some of the more extreme religious philosophies. Spontaneity is spurned and it seems you will never be happy again. If it seems that way, then it will fail; you will fail.

Just going back to the diet analogy, the successful dieters set themselves short term targets and provide themselves with rewards when they hit those targets. They also have a long term objective they are working towards with a big reward in the end.

If you are dealing with debt, a long term target may be simply to be debt free. A worthy target with a wonderful reward in the end: perhaps you should sweeten the deal with an affordable holiday to celebrate what could be years of careful budgeting.

Equally you may be working towards a house purchase - a mountain to climb for many people these days. You need to set yourself some success staging posts along the way.

For example, in dealing with the food budget problem, always aim to under spend on your target budget amount. Put at least some of the saving to one side. This under spend could now be used for trips to the pub etc. This will make you think twice about over indulging during a normal week as it will jeopardise a treat later in the week or (more likely) later in the month.

You can get a great deal of leverage from this by careful spending - that drink, meal or trip to the cinema will be so much sweeter when you have worked extra hard to earn it.

Better still make the reward some time off, or new clothes - something with lasting value. You need to decide what will turn you on.

With respect to the long term objective, never lose sight of this. If it is a new house - hang a picture of your ideal home on the wall or put a small picture above the TV to keep it fresh in your mind always.

Never forget your objective and last, but not least:

never ever give up.

Who out there likes to create budgets each year? Probably nobody - it takes a lot of work! I've got some good news for you, there might be a simpler way to do all of this. All too often IT managers sit down and try to create a single master budget. This can be very hard to do. I've got a better way for you to accomplish the same thing in a much shorter amount of time!

What Is A Master Budget?

So just exactly what is this master budget thing? It turns out that no IT team works on just one project during a year. What this means is that your job as an IT manager is instead of trying to sit down and create a single budget, you need to show some leadership and create a separate budget for each of the projects that your team will be working on.

The trick here is that the company doesn't really want you to submit a handful of budgets for your team. Instead, they are looking for you to turn in one single budget - a master budget if you will. This means that once you have the budgets for all of your individual projects, you need to combine them into a single budget that incorporates the funding, resources, and returns that all of your projects will require.

Your budget will summarize the financial projectionsof all of your team's individual projects during a given period. This means that the budget will need to incorporate both your operating budget as well as your financial budget.

3 Questions To Ask About Your Next Master Budget

If combining the numbers that you've created for your individual budgets was all that was required in order to create a budget, then you could turn it all over the finance department and be done with it. However, as with all important things in life, it's not this easy.

When you submit your master budget to the powers that will eventually grant you funding with which to accomplish all of the great things that you and your IT dream team want to accomplish in the upcoming year, it will be reviewed. This means that you have an additional step that must be performed before you turn your master budget in.

There are three questions that every IT manager must ask about their master budget before they submit it to their senior management for final review and funding approval:

1. Alignment?: In IT we talk a lot about aligning the work that we do with what the rest of the company is trying to accomplish. These are fine words, but they really take on a great deal of meaning when we are dealing with budgets. As an IT manager, you need to review your master budget and determine if the projects that you are trying to get funded will fit in with the larger strategic goals of the company.


2. Resources?: There's an old phrase that says that you can't get blood from a stone. What this means for IT managers is that before you turn in your master budget you need to determine if the company has the resources (including cash) to fund your master budget. If you are asking for US$100M and the company only has $10M to spend, then things aren't going to work out.


3. Value?: You are proposing that the company fund your IT team to do some work. The big question here is if it is going to be worth it for the company. Will the work that your team performs generate enough value for the company to allow it to achieve its goals?

What All Of This Means For You

Every IT manager is asked to create a budget at some point in time - generally on a yearly basis. This can be a challenging task that takes up a lot of your time. However, it doesn't have to.

You need to understand what a master budget is. It is a single budget that brings together all of the individual budgets that you've created for the various projects that your IT team will be working on in the future. This single budget needs to align with the company's goals, identify the resources that you'll need, and determine if you'll create enough value to make it all worth your while.

Taking the time to create a master budget is one of the core responsibilities of an IT manager. Using the divide-and-conquer strategy for building the budget while answering the 3 questions that we've identified will ensure that your next master budget will be right on the money.

The word "budget" makes many people head for the hills. Who wants to sit down and do a budget? Budgeting means no more spending money, you can't get your favorite coffee anymore, and Christmas can't be fun.

I disagree. Our budget has helped me and my husband focus on two things:

1. More of the things we really want

2. Less of the things that aren't that important

Over the years, I've made many mistakes. I've also learned how to overcome my mistakes, and have talked to other couples about their budgeting process.

Budgeting does not have to be hard. It's a process like anything else. Here are the 3 biggest budgeting mistakes I've lived through myself:

1. Leaving things out of the budget!

Clothing - We all need to wear clothes, so it's hard to say "I'm going to shop at Goodwill for the rest of my life, so I don't need a clothing budget." I've tried this myself when the kids were little, guess what? We still needed essentials. Who wants to wear used underwear and socks?

Spending money- I suggest you each have your own "allowance" for every budgeting period. Money you may spend however you wish. Makes budgeting a little less painful.

Gifts- Christmas, birthdays, Mother's Day, weddings, baby showers, etc.

Restaurants- Times have changed. When I was growing up, to go to a restaurant was a huge treat! Now, most of us have restaurant food at least once a week. According to the National Association of Restaurants, in the year 2000, we were ALREADY eating out 4.2 meals per week on average. Even if you THINK you aren't eating out anymore, I suggest putting a number in the "Dining Out" category.

Infrequent expenses- insurance, memberships or subscriptions and medical expenses

2. Not being realistic.

There are a few areas in your budget that are surprisingly more costly than you think!

Groceries-You probably have a number in your head right now for how much you spend per month on groceries. I always thought I could keep it under $500 a month. (this was several years ago, I'm up to speed now) Food is now the first item in the budget, and it gets more than its fair share. You will be surprised when you start tracking your grocery receipts. All those little trips to the grocery store add up!

•Gifts- This has got to be the most frustrating category in our budget. Christmas comes at the same time every year, but weddings, birthday parties, baby showers. Those things are sometimes unpredictable. Here are two ways I've learned to deal with the problem:

--Set aside money every month for Christmas.

--"Pre-buy" baby gifts, wedding shower gifts, and kids' birthday gifts. That way, I have a stash when the event happens unexpectedly.

3. Not communicating with your partner and giving up too soon.

I put these together because it's easier to give up and say budgeting doesn't work rather than sit down with your partner and work on finding solutions.

If you've never budgeted before, it's a new skill. New skills take time to learn. It is going to take several months of trial and error before you have a workable plan.

The "final" budget is never final! It will change due to new jobs, added income, lost jobs, illness, etc. At the beginning of each month, you only make a budget with the knowledge you have at that time.

It's not something to beat yourself up about.

As a CPA, I figured this stuff should come easily to me.

Wrong assumption!

I'm still human and have a husband that's human too. We BOTH make mistakes with our money. We have the normal communication problems many marriages have. I have learned to accept that the budgeting process is not perfect, and it's OK that I don't spend the EXACT amount for every line item in our budget.

The best thing you can do for yourself is keep these things in mind, be flexible, and GET STARTED!

Budgeting has allowed me to direct money to where I want it to go and to erase debt quickly. It also has helped me to stay out of debt. Especially credit card debt. I probably could stop budgeting at this point and stay out of debt. I'm not sure I trust myself completely to do this all by myself and in my head.

But I'm not going to stop because I really like knowing exactly where my cash is going. And being able to leverage my budget to erase debt and build wealth is an awesome feeling.

Here's How I Do It

I actually start creating my budgets several months in advance by planning out the next 3 to 4 months of budget sheets. I use Excel and I take my current budget file and copy it 3 or 4 times and I aim to have the general framework established months in advance per budgeted month. Here are 4 specific criteria I aim for in each budget:

1. Make sure it is a good representation of what can potentially happen that month. For example, when creating my September budget I am entering line items in preparation for Christmas presents, Christmas tree, and food for the Christmas dinner. These line items are not needed in the summer months and therefore you would not find them on my June, July or August budget sheets.

2. Attempt to estimate my utility payments based on last year's budget. Fall and winter I see higher gas bills due to running the heat (furnace) and the gas fireplace. Summer months see higher electricity bills due to the air conditioning. Spring is usually the least expensive because we generally do not use the furnace or the AC.

3. Do a little housekeeping. I make sure the month and year are correctly reflected on the budget sheet. I remove any extraneous dollar amounts or line items that no longer apply or are out of date.

4. I don't try to have the perfect budget at this point. Perfectionism this early is just a waste of time. Just get the budget sheet in general shape so it is ready to go when the month finally arrives.

5. File the budgets in my budget folder on my computer. Try to stay organized.

Your Call to Action

- Properly preparing your budget in advance is key to successfully budgeting and erasing debt. Here are some do's and don'ts for creating your own budget.

- Don't make your initial budget so tight with the incoming/outgoing money that you feel locked into an unrealistic plan. Just get your estimated income/outgo down on paper (or electronically) in preparation for when the real month comes.

- Don't leave unrelated items on your budget sheet. If it is December and you are creating a budget for March, you do not need the line item for a Christmas tree on your March budget. Take it off.

- Do try to take a guess at what your month may look like. If you know your garbage removal fee will be due in March, make sure you include that. If you are due a commission in February, make sure to include that on the income side of the form.

- Do keep it simple. Keep your budgeting sheet simple and easy to use. Customize to fit your own style of doing things. Your brother-in-law's complicated Excel budget form may be easy for him but a nightmare for you. Be sure to make your budget your own and use tools you feel comfortable with.

How are you doing on your comparison of actual to budgeted figures for this year? Are you on target with your budget? Don't understand what I'm referring to? Then it's time for Budgeting 101!

A budget is part of your financial roadmap. How do you know where you are going if you don't have a destination selected and the road that you are going to take mapped out? Just throw the dart and see where it lands? If so, you make up the majority of small business owners. However, that trend is changing. With changes in the economy we are faced with even more outside pressures on our business to be profitable. Lenders are more selective about giving money to those who don't have enough security to ensure their return on the loan. Yeah, it's the same old story that they always want to give money to those who have money. What about those of us who don't? You better have a solid set of financial statements to show that your business is viable and going to be a wise investment for the lender.

Lenders want to get a return on their investment (i.e. loan to you) so they will want to see how you've been doing. In addition, they want to see what your predictions for the future are. A budget or financial projection is going to be sought by the lender. They want to see how you are mapping your future of success.

Breaking your budget into monthly increments will ease the process and it won't seem so overwhelming. Prepare some general goals for your financial budget for the year and then see how you can achieve that goal, one month at a time through a monthly budget.

Questions a budget will help you explore include:

What do I anticipate for my: Income? Expenses? Capital Expenditures? Savings?

Often times we'll use the excuse that we don't know "how" to do a budget because our income and/or expenses are too hard to predict. Don't you want to have an idea of where you are going? The challenge for the New Year is for you to be more proactive with your finances. Whether you are running a service or product-based business! Reactive financial management often leads to the demise of our finances and our businesses.

Budgeting doesn't have to be an overwhelming task. Follow these easy steps and you'll be amazed at how easy it is to achieve your goals! It's not too late. This is a great time to start the budgeting process so you can work on the budgeting project in small increments.

Where should you start?

1. Analyze your current and prior year(s) budget. It's always a good idea to know where your starting point is! What areas did you do well on? What areas do you need to work on? If you don't have a budget, and most don't, then you will need to look at your actual financial statements including: a. Profit/Loss b. Balance Sheet c. Cash Flow Statement

2. Utilize a simple format for your budget based on the Profit/Loss format:

Income - Cost of Goods Sold - Overhead Expenses = Net Income/Profit Don't get confused though! Cash and Income are two different concepts, so you need to ensure that you set clear goals for the budget you are putting together.

3. Use the budgeting features in your bookkeeping software to assist you with the development of your budget, if available. QuickBooks® has a great budget format ready for you based upon your Profit/Loss and you can input the budgeted figures into the appropriate line item.

4. Assess your budget realistically. It's always a good idea to have an objective third party review your information. We tend to overestimate our income and underestimate our expenses so that we show a positive flow for our budget. That isn't good if it's not realistic. We need to be aware of where our money is coming from and going to so that we can be proactive in our financial lives. It will be amazing how much less stressful your world can be when you effectively manage your finances.

Make sure to document how you are coming up with your estimate. For example, if you predict $10,000 in sales, you need to document that it is based on the following equation (# of sales multiplied by $ amount per average sale). This will give your predictions substance and allow better variance analysis when your actual figures vary from your budgeted figures.

5. Compare your actual activities to your budgeted activities on a monthly basis. This comparison is what creates the REAL value for you. Comparing helps you to assess what parts of your finances are excelling and what parts need attention. Without comparison, there is no value in budgeting.

When you use QuickBooks®, you'll have preformatted reports available that will calculate the variance between actual and budgeted income and expense items. This will be a great tool for you to assess which aspects of your business are on target and which areas you need to reassess.

6. Keep your budget as a "living" document as you may need to adjust it for aspects not previously included. This doesn't mean to change it because you want your actual to equal your budgeted numbers. Changes in budgeted amounts should be for those times when unforeseen events have occurred or arisen.

We all have many demands on our time, but managing the financial aspects of our businesses is a responsibility that we need to take seriously. If this is not one of your strengths, then find someone to assist you with this process. It's like any other skill, it takes time to understand the various aspects but it will happen. There's no better time to take control of your business path than today!