Budgeting

After surrendering your financial debt burden to the Lord and developing a zero-based budget, you are ready to start living in that budget. Envelope budgeting is your ideal complementary tool to prevent more debt.

What is envelope budgeting? Simply, for each category in your zero-based budget, place one-twelfth of the years budgeted amount in an envelope; that's it, one envelope per category. When you need to spend, take funds from the specific envelope. When the envelope is empty, the budget is finished, and you must wait until next month to replenish that envelope and continue the process. It's that simple.

Still, many folks have valid concerns about envelope budgeting. Let's look at these two. First, you might be uncomfortable keeping cash in your home but want to use envelope budgeting. Second, you are unfamiliar with the treatment of amounts such as car maintenance that occurs sporadically during the year?

Using Envelope Budgeting But Not Keeping Cash At Home

If your zero-based budget for groceries was $300 monthly, and you want to use the envelope system, but wish to keep cash in the bank, what do you do? Before I answer, let me caution you. Typically, you spend less using cash than with debit or credit cards. The research is clear: you spend fewer dollars using cash, more with debit cards, and even more using credit cards.

Working with the envelope system while keeping funds in the bank is feasible but will need a bit more effort, and discipline. In the grocery's envelope, place a note paper, and mark on one side, budget for the month, $300. Before you buy groceries, estimate how much you will need, withdraw it from the bank, and record the amount on the flip side of the paper. If you withdrew $50 from the bank, but spent $47, write this amount on the paper, and place the $3 change in the envelope.

Once withdrawals total $300 for the month, your groceries' budget for the month is finished, unless you have unspent cash in the envelope. Assume in the month you withdrew two amounts, $50 and $250 and spent $47 from the first, and $240 from the second. The balance of unspent cash in the envelope of $13 ($3 plus $10), is the amount left to spend for that category, for that month. Repeat the process next month.

Envelope Budgeting For Sporadic Expenditures

Keep budgeted funds for these items in the bank instead of in cash in envelopes. Open a separate bank account and monthly, place one-twelfth of the yearly budget for these items. As above, place a note paper in an envelope for each of these categories, and write the budgeted amount on one side. Before spending, consult the amount noted on the paper in the envelope, and ensure you do not exceed indicated amounts for these items such as your car license, insurance, scheduled car maintenance. Withdraw needed cash, or write a check, when you need to pay these items.

Summary

Zero-based budgeting is the tool you use to develop your estimated spending for the year. Envelope budgeting is an effective complementary tool to help you control your lifestyle choices. Ideally, place cash in category envelopes and spend cash as needed. Do not borrow from categories; when your envelope is empty, you have no budget left.

These two tools require discipline, need effort, but will help you get out of debt and live debt free. Do you want a lasting change to move from bondage to debt freedom? If yes, try these tools.

Copyright © 2012, Michel A Bell

With the bargaining chips at the table for debt reduction talks, we expect to see the partisan dreams of each party spilling over into the public discourse. Raising taxes, reforming entitlements, cutting wasteful government agencies... Rarely can a deal be mentioned without the deal-breaker (as evidenced by the current debt ceiling standstill). One idea floated by many Republicans and even some conservative Democrats is an amendment to the U.S. Constitution demanding a balanced budget from Congress, similar to most state budget arrangements. The government would not be able to pass a spending plan that exceeds its income. While it is generally championed by anti-tax fiscal conservatives, this plan will ultimately lead to new taxes and greater budget peril. And with an unstable population leading into the future, a balanced budget amendment is little more than another unfunded mandate.

State and local elected officials hate unfunded mandates. These decrees from higher government force them to act in a certain way (usually very costly) without any funding to back them up. Conservatives like to take on these mandates as another example of government interference and expansion. Yet in the heat of the budget crisis, an amendment forcing the hand of budget writers is ironically a call for another strict government mandate. It forces more decisions like we face now: do we make up the difference through budget cuts or by raising taxes? There is definitely no guarantee that Republicans will have the leverage they currently have to shape the budget, and the future might see an administration with more power to raise taxes. Even worse, when we run out of budget cuts, painful taxes are the only other option.

We cannot confuse a balanced budget amendment with an easily balanced budget. It will not be simple to balance a budget every fiscal cycle, especially with the ups and downs we experience in the economy. When we entered the recession, had we had this amendment we would have no other option than to make painful cuts in programs like social security and Medicare. However, once the economy recovers, we suddenly have more money to float to these programs. This leads to a lot of problems. Do we consistently increase and decrease social security checks to seniors? Do we allow people to gamble their retirement on whether the government will return the money they paid in? On entitlement programs, we are better having a meaningful reform (which will help balance our current budget) with the elasticity to adjust to future economic changes.

A second budget crisis we would set ourselves up for is a wartime power struggle. Congress would then be forced to either lift the amendment or enact further cuts to other government programs that people rely on. Wars are certainly not cheap (as we know all too well), and I can't imagine cutting education so we can involve ourselves in another conflict. However, these are the choices we would have to make. The ultimate lesson is: our budget is too unpredictable to demand a balanced budget every year. We have seen the painful cycling of an economy, but the stock market will become no more stable with an all out partisan war every economic cycle. Think partisanship is bad now? Just wait. A balanced budget amendment might be politically popular right now, but when partisan gridlock slows or stops the services people depend on, the appeal will soon turn to frustration.

The evidence does not stop there. Demographic trends show an increasingly aged population. Social security and Medicare are funded through young and working individuals. Entitlement programs like these are considered "mandatory spending" in our budget, meaning we must pay out our obligations to those who are eligible. This places an increasing burden on our young taxpayers. Though it is clear we will need some reform, we cannot increase the strain wrought by a balanced budget amendment. These programs would consume our budget and our political willpower, and set us on a more unsustainable path than we are on right now.

Aside from the support by members of Congress and the consideration of even our top political leadership, the public generally supports a balanced budget amendment in theory. People want to see a budget that works for us. However, when the question is broken down even further, the public does not want taxes to be raised or social security to be drastically cut to meet an exact number. The solution is this. We need a balanced budget whether we like it or not. We cannot go on spending our way out of economic viability. We need significant reform and true fiscal responsibility. But we also need the option to work with our budget in the longer term, not every single cycle.

To extend the metaphor used by balanced budget proponents: a family needs to balance their budget. They cannot take on a debt load as crushing as we already have. However, a family does have the option to take out small loans to invest in solutions that are right and good for themselves and others. Most homeowners have a long-term home mortgage. When purchasing the vehicle that drives them to work, many people take out a small car loan. Even for paying the bills that keeps their family fed and housed, people use credit in manageable amounts for the good of their family. We need flexibility to honestly address our budget. We must be responsible.

It sounds hypocritical to demand a balanced budget without a balanced budget amendment. In my judgment, we cannot afford to limit our options when it comes to budget fixes. I am a consistent supporter of debt reduction and budget solutions that are substantial, but our future depends on our innovative solutions, not unfunded mandates from the past. We can balance our budget without being told to, and the American people can check their politicians through the mandate of free and open elections. We can keep our country free by not limiting our possibilities and potential.

In these hard times, it is essential to manage one's finances and invest on things wisely. Not only can you benefit from it in the long run but you can also become more mature and knowledgeable when it comes to handling your finances. That is why, it is important to come up with effective and doable budget plans to ensure the future for you, your family and your business.

What is budgeting?

The word budgeting come from the short word "budget" which means allocating funds that is available and can be readily used in case of any emergency. It is a strategic way of planning for spending and saving your money. It is done by making a calculation and estimating your monthly earnings and expenses (it also involves all your bills, debts and any other purchases which involve shelling out some money). Budgeting is known to be an essential task in every individual's financial situation and way of living since budgeting is the determining factor of where you are in terms of your fiscal status. Also, budgeting entails a lot of self-discipline and determination, for it can be a daunting task to observe since we have endless needs and wants.

What is the role of budgeting to debt management?

Budgeting and debt management always go hand in hand. Budgeting during a debt management process is one of the initial steps when it come to controlling your income and expenses. With the help of budgeting, not only can you have a successful debt elimination and a debt management process but you can also benefit from fiscal constancy and freedom.

It is wise to do budgeting since you cannot bring back the past - all the previous purchases you've made and the things you used your money for. But instead, what you can do is to be bright and hopeful for the future and do budgeting to build resources you can use later on.

Why is budgeting important to debt management?

Doing a debt management method to help you eradicate your debts is helpful, but when you put budgeting arm in arm with debt management, it makes it more effective. Remember, you can never get any assurance when you don't make a budget.

Also, budgeting makes life easier to handle. Debts are much convenient to deal with and you have a greater grip on your finances. It does not only aid you in the financial aspect but it can also help you nurture yourself and your being. Admit it or not, budgeting does take away a lot of the frustrations you have. It relieves you from all the stress you feel with your debts.

Through budgeting, you will be able to figure out how much you are in debt of and how much money you can actually afford to spend and how much you can save up.

The Advantages and Disadvantages of Budgeting

Advantages

·It gives you a strong sense of where your money goes (which things you spend on, which bills you have paid already and which purchases you can make cut backs).

·It helps you attain all your financial objectives.

·With budgeting, you are free to do whatever you want to do. You can go on a vacation, make a lot of trips to different countries, buy a new house, car, property, etc.

·People who do budgeting can be ensured of a good life even if they retire.

Disadvantages

·It can get quite confusing.

·It can be hard to stick to especially during times of crisis.

·Because of the different demands and the desire to make both ends meet, budgeting sometimes become impossible to do.

3 Steps to Successful Budgeting

1.) List down your income and purchases.

·Document and do a calculation of your income and estimated expenses.

2.) Reduce spending habits.

·Identify which areas you can cut back - like your regular visits to salons, 3x a week dinner at restaurants or monthly shopping sprees.

3.) Practice sticking to your budget.

·The key to effective budgeting is to start off small and eventually expand your budget as time goes by. By doing this, you will have more chances of not breaking your budget and you won't get pressured.

What is a Budget?
A budget is a projection of future revenues and expenses for the organization preparing it. It is comprised of a balance sheet, income statement and cash for the coming year. During the year individual months can be compared to results. At the end of the year full years can be compared.

Why Create a Budget?
A budget allows you to monitor your company's operations. Your yardstick is whole dollars. Closely monitoring your operations: revenues, costs, profits and cash flow allows you to adjust as needed to stay on track and reach your goals.

How to Use a Budget
A budget is a financial yardstick to measure the organizations effectiveness in reaching the goals set by management. A budget also lets creditors know that management plans ahead in anticipation of foreseeable needs.

A Budget Will Show:
Projected revenues and the expenses needed to reach the profit goals. If your revenue projections turn out to be inadequate for the total expenses, adjust your plan by acting to raise sales, or adjust your plan by acting to cut costs. Every organization should have a budget before making any long-term decisions such as: leasing property or equipment, or purchasing equipment. The place to make adjustments is on paper where they are less costly.

The three main parts of a budget are total revenues, total cost and profits.

Total Revenue
Sales are the reason for budgeting. It is important to estimate sales based on past history and anticipating any future events that could have an impact -- including inflation. Sales are the base from which costs and profit can be estimated.

Total Costs
Total cost includes fixed, variable, and semi-variable. It is complicated because fixed costs are not dependent on a level of operations, but can change due to inflation. Variable costs change directly with the level of sales activity. Semi-variable costs have a fixed and a variable component. Inflation and Other Adjustments (price increases). A budget will be as good as the numbers used to make it. Therefore, it is important that your estimates and calculations be as accurate as possible.

Profit
Profit after tax should be large enough to make a reasonable return on your investment of dollars and time. Your targeted profit should allow for this. You can research your industry to determine if your investment is justified.

The Budgeting Process
When creating a budget, you must consider: What is your profit goal, how much will it cost to achieve, and what level of sales will support profit and costs. It is safer to overestimate costs and underestimate revenues associated with the products or services you offer.

Constructing a Budget
You can start with a forecast of sales or a forecast of profits. For practical purposes a forecast of revenues would be preferable. Then forecast the expenses necessary to make the profit target. A product oriented company would have to also forecast gross profit based on anticipated purchases, returns, freight in, etc. Adjustments would be made based on the resulting net profit after taxes and interest. The adjustments could be annual or monthly. Actual would be compared to budget monthly.

The Master Budget
A master budget is only necessary if you are tracking more than one process, activity or department. In that case you would prepare separate budgets that are interconnected to a master budget. This is typical of cost centers or profit centers.

Summary
A budget focuses the activities of an organization so that everyone is working toward common goals. Employees feel more a part of the organization and it helps them realize their importance to the organization in achieving the goals.

Budget preparation is a common affair in most established companies. Most of the time, the preparation procedures and formats are inherited from the predecessors. Giving short time and tight deadline are very common.  Most people who are involved in the budget, were always too engrossed to rush and meet the deadline.

How many people involved really understand the full budget preparation process? I have been preparing budgeting for the last 10 years of my working career. I realised that many of the people who are involved in budgeting, that I met, don't really have a proper training or knowledge of the full budget preparation process.

Therefore, I prepared this guide with an objective to give a better understanding of the budgeting process.  This guide is based on real practice and may differs from organization to organization.

Budget Preparation Guide:

Budget templates and schedules may differs from organization to organization. However, most master budgets have two major common components such as the operating budget and the financial budget. From my experience, it is pertinent to have first two years prepared in monthly format and the next three or whatever years in yearly format.

1. Operating budget consists of the following components:

 a. Sales/revenues budget provides the various sources of revenue lines and how they would be achieved.

b. Cost of sales/direct cost budget provides the associated cost directly linked to the various revenue lines.  The difference between the sales/revenues budget and cost of sales/direct cost is the Gross Profit Margin.

c. Operating expenses budget provides the details of the indirect operating cost such staff salary, office rental, printing and stationery, telephone expense and etc. Such expenses normally will be incurred regardless whether there are sales/revenues.

d. Advertising & promotion budget provides the various plans of how the organization is going to promote its business. Example would be the advertisement cost, product promotion cost and etc.

The overall operating budget basically provides a full picture of the business operation and its bottom line.  

2. Financial budget consists of the following components:

a.  Capital budget provides the details of the capital expenditures such as office renovation, hardware investment cost and etc.

b.  Income from operations budget is the end result (bottom line or profitability) of the above operating budget. It can be a cash deficit or contribution from the operating activities.

c.  Cashflow budget provides the funding requirements of the business operations. It consist of the following components:

i.   Cash generated/used in operating activities.
ii.   Cash from/used in investment activities.
iii.  Cash from funding activities.

The financial budget focuses on the financial aspects of the business. It would tell whether the business is cash self sustaining or requires external cash funding from else where.

Unless people make a personal budget for themselves they will never be successful in their journey towards financial freedom. A budget is like the training wheels on a bike and works as a finance tool that helps keep people on the right path. For most it is necessary to keep a personal budget for their entire life but for others a budget is not needed after they get a feel for how their money is being spent and where it is going. Setting up a budget is the simplest and most basic building block in a persons quest for financial freedom. I can almost guarantee that you will not be successful on your journey toward financial peace without setting up your own budget.

Usually when people hear the dreaded B word (budget) they often run for the hills and they often try to avoid a financial adviser that suggests that they make a budget. People are often very scared of the work involved in making a personal budget but I am here to tell you that it is not really that bad. Resistance in establishing a budget often happens because people see a budget as some type of trap that restricts their freedom and forces them to change the way they live. The truth about budgeting is often quite the opposite. Usually those that do not set up a budget are the ones that have a ton of credit card debt and are restricted by the large debt payments they are required to make each month.

When you setup a personal budget you are simply setting up a plan to spend your money with intent as opposed to spending it aimlessly. The idea is to plan everything out so that you do not end up spending more money than you make. A personal budget usually seems restrictive at first but once you follow it for a few months it will help you to move away from your reliance on credit cards and it will actually give you more freedom.

Once you establish your budget you should expect it to take 3-5 months to get things right. In the beginning it is likely that you will make mistakes in your budget and forget about expenses. After 3-5 months you should be able to work through this and your budget should be almost a mirror image of your actual spending.

After establishing an accurate budget the next step is to stick to the plan. Most people tend to fail here. Anybody can write out a budget plan but the hard part is actually sticking to this budget each and every month. If you can stick to your budget I promise that you will be more financially free.

I hope that you now understand the importance of establishing a personal budget for yourself. Without it you cannot begin to pay off your debts and save money because you have no way to track and properly allocate your income.

My suggestion is that you do yourself a favor and grab a note pad and a pen and start working on your own personal budget. It is simple and completely freedom.

THE RATIONALE AND PROCESS OF BUDGETING

Here are twelve good reasons to get you started:

1. Family budgets are used as a baseline, analysis-tool and roadmap. It is a useful tool and guide. It tells you whether you are headed in the direction you want to be headed in financially. It helps you to move from spending to saving and good fiscal balance, management and responsibility.
You may have goals and dreams, but if you do not set up guidelines for reaching them and you do not measure your progress, you may end up going so far in the wrong direction you can never make it back. Can you imagine the government or a major corporation operating without a budget? No, and neither should you.

2. It is often described and justified as an empowering enabler. A budget lets you control your money instead of your money controlling you.

3. A budget is a realistic estimate and true reflection of current circumstance and means, a type of financial situation-analysis that will tell you if you are living within your means. Before the widespread use of credit cards, you could tell if you were living within your means because you had money left over after paying all your bills.
There are lots of family budgeting tools available on line that make it a fun and enjoyable task and activity, to assess and analyze your family's financial situation with minimum effort.

There is also lots of free financial software and most of it sets up easily and provides you with a detailed family budget online. It manages your finances, hassle-free and almost effortless.
Well, almost! It will require input and minimum effort through hands-on involvement in setting it up, populating, maintaining and editing it. Mvelopes.com is a good example of market offerings that are available at no cost to you, just waiting for the motivated family budgeter to embrace and try it out!
Some websites offer free financial newsletters by e-mail, with lots of money saving tips, budget advice, and other relevant personal and family-related financial information
The availability, accessibility, virtual marketplace, ease of use and more of credit cards has made the need for family budgets much less obvious. Many people do not even realize they are living far beyond their means until they are knee deep in debt, struggling to make ends meet and sinking fast into murky financial waters.

Budgeting is and can be a life and money saver, a reality check, BUT ALSO a remedy!

4. A budget can help you meet your savings goals. It includes a mechanism for setting aside money for savings and investments.

5. Following a realistic budget frees up spare cash so you can use your money on the things that really matter to you instead of frittering it away on things you do not even remember buying.

6. A budget helps your entire family focus on common goals. It is unifying families in mutual purpose and effort, working together towards a successful outcome and reward.

7. A budget helps you prepare for emergencies or large or unanticipated expenses that might otherwise knock you for a loop financially.

8. A budget can improve your marriage. A good budget is not just a spending plan; it is a communication tool. Done right, a budget can bring the two of you closer together as you identify and work towards common goals and reduce arguments about money.

9. A budget reveals areas where you are spending too much money, so you can refocus on your most important goals.

10. A budget can keep you out of debt or help you get out of debt.

11. A budget actually creates extra money for you to do use on things that matter to you.

12. A budget helps you sleep better at night because you do not lie awake worrying about how you are going to make ends meet.

Nevertheless, despite all these wonderful reasons quoted above, people are still hesitant to commit to family budgeting as standard practice in their households. We might again want to probe a little deeper still and ask why?

TOP THREE CAUSES OF BUDGET FAILURE

Many people make an honest attempt to budget, but become discouraged and give up before they are able to accomplish any significant financial gain. The top three causes of budget failure come into play before you even begin to set up your budget. Awareness of these budget busters, is your first line of defense in the Battle of the Budget.

Budget Buster #1 - Negative Attitude

It cannot be emphasized enough--a positive attitude about budgeting is essential to your success. If you think of budgeting in negative terms (such as a financial diet, financial handcuffs, restrictive, penny-pinching, a sacrifice, etc.), you are sure to fail, unless you are a martyr or a masochist who finds some strange reward in a punishing experience. For purposes of this article, we will assume that you are neither.

A positive attitude means you think of a budget as a means to an end--a way to achieve your dreams and goals--and that postponing the instant gratification of spending all the money you earn is worth the rewards you will earn in the end.

Budget Buster #2 - Lack of Motivation

What is your motivation for budgeting? Are you trying to appease a nagging spouse? Following the terms of a debt repayment plan with a consumer credit counseling agency? Complying with an agreement made in bankruptcy court? These are not bad motivations, but they are external pressures and will probably not be easy to maintain over time. The best motivations are internally generated: do you honestly believe that budgeting can help you meet your goals?
If you need a little help in the motivation department, see "Twelve Reasons Budgeting Can Improve Your Life". A quick re-read of these will surely inspire and ignite a motivational spark or two!

Budget Buster # 3 - Unrealistic Expectations

What do you expect to gain from instituting and following a budget? Do you think that setting up a budget will reveal large caches of hidden cash or that the budget fairy will sprinkle fairy dust over your budget and magically transform your spending habits after a month or two of tracking expenses?

The reality is that budgeting is an endurance event--those who stick with it, through thick and thin, will come out ahead financially. Do not expect miracles. What you WILL see if you stick with it is steady, measurable progress towards the goals that really matter to you.
Starting a budget without having a positive attitude, internal motivation, and realistic expectations, will probably set you up for failure. You can greatly increase your chances of success by ruling out the three biggest budget busters before you even begin.
Family budgeting - just the thought of it makes most of us cringe. However, mostly, we do attempt to curb our spending and live within our means. Others fall into bad habits, habitual spending patterns or impulse shopping and over-extend themselves, landing knee-deep in debt!
Ironically, one of the first remedies for any debt consolidation or repair strategy, is to take a long hard look at the budget and financial patterns within the household! It is almost like running a diagnostic.

To take a closer look, you are in effect placing your family dollars under a magnifying glass and microscope. This can prove both challenging and painful for most people. We hope to alleviate some of that initial discomfort and apprehension with this handy step-by-step guide and tips.
Most financial advisors will tell you that you have to reward yourself for good fiscal responsibility, discipline and habits, to increase your motivation and success levels.
Budgeting is the first step, sticking with and to it, a close second and the sometimes overlooked but ever-important reward, has to keep the motivation going! To repeat and continue to experience the benefit of the budgeting cycle and discipline could be an uphill battle, but there are calmer seas ahead.

Cash management, savings, planning for retirement, setting financial goals etc. active and hands-on, is becoming increasingly important for the survival and well-being of our families everywhere.

Be your own best expert with coming up with new ideas on how to save money, budget better and spend less! Your unique strategies stem from a deep understanding of your own situation, demands, and needs. Discover which tips and ideas work best for you. After all, fiscal management and finances are definitely not a one-size-fits-all solution environment. It is personal, customized and unique.

You have made the decision to create a personal budget and the next stage is finding the right software to suit your needs. Below are some guidelines to help you choose the right financial software, along with the possible pitfalls when using free software.

Why make a personal budget? Making a personal budget is simply about making a log of all your expenditures and all of your income so that personal future income can be allocated towards expenses, savings and the repayment of debts. Once all your bills are paid, your bottom line is the amount that is left over for you to enjoy or invest, or the reverse is how much enjoyment you have to cut out of your life before you are in serious trouble financially! Some people have a lot of debt, and the only way to get back on track and get a clear picture of their finances is to make a budget where past spending and debt are considered to create a personal budget.

What features do I need for my personal budgeting? When choosing personal budgeting software, decide what features you require. If you have not made a budget before, keep it simple as the more complicated the budget system is, the less likely you are to stick to it! You do not need to list each and every item purchased, but can put them all into one category, e.g. car, food, etc. When choosing budgeting software, look for a program that can do the following:

• Manages cash flow
• Keeps bank accounts, credit cards and savings information in one place
• Creates charts and reports showing your budget activities so you can visualise how you are spending your money and can track progress
• Creates schedules and alerts
• Manages debt
• Gives savings recommendations/sets up spending goals
• Has bills calendar/bills tracker
• Creates budget/budget calculator showing areas to cut back on and generates a spending plan

Where can I buy personal budgeting software? There are numerous personal budgeting software programs available either as downloads or discs that are installed on your computer. Search online to find software that will suit your needs and read up on the many reviews that are available about each particular package. You might, for example, choose to buy a bookkeeping package which includes budgeting functions. If available, download a free trial version first before deciding on purchasing a particular program. Compare prices, designs and features and see if there are any offers or coupons available when buying online.

Is free web-based personal budgeting software safe? These free sites host all your data online. The pros of this are these sites are great if you cannot afford to buy a program, or if your computer fails, your data can be accessed from any computer by using your password. There could be drawbacks however, as there is the possibility of security issues as not everyone would want to keep their personal data on somebody else's server. If you are just getting started with creating a personal budget, do not get overwhelmed by the task ahead. Once you have made that step and got started, the results will be extremely rewarding when you see your spending clearly set out before you, which will help you to achieve your financial dreams!

To say that every family should have a monthly budget is an understatement. The only way to control your family's finances is with a budget which keeps track of where the money comes from and where it is ultimately spent. A budget, or cash flow plan for those who don't like the B word, is a critical part of any family's secure financial future.

For most families a budget is far down the list of things that are important in the day to day happenings for most families. For most people doing a budget is another task for which they have little time to deal with. Unfortunately this is the reason so many families are having the financial troubles they are dealing with today. A budget can also be a divisive thing if it is used as a way to control the spending habits and place blame for the financial failings being experienced. For a family budget to work properly it must be used as a tool by all family members that involves financial goals and compromise to reach them.

A budget is actually not that hard to create and keep simply because it is just a list of monthly income and expenses that is kept either on a sheet of paper or on a computer equipped with budgeting software. The idea behind any budgeting process is to create a balance between income and expenses so that at the end of the month there is money left over to save, invest, and build wealth.

There is no concrete method for building a family budget because each family's financial needs are different. Some families may be saving for a new car or family vacation, while others are more intent on building savings and college funds. Most families start their budgeting process simply by writing everything down on a piece of paper but as their financial needs grow more complex they may find they need the services of a financial or investment planner.

Another thing to think about and discuss is what are your family's long term financial goals and how do these fit into and affect the monthly budget. It is important to consider not only the goals of individual family members but also the collective goals of the entire family as well. These can include such things as putting away money for a new home, saving for children's college fund, building that retirement nest egg, and probably the most important thing for any family building an emergency savings fund to protect against unforeseen financial emergencies.

The hardest part of finalizing the family budget is making sure you have all the monthly expenses written down. Missing even one or two can seriously affect your budget because at the end of the month you will have less money then originally budgeted for. Be sure to think of those surprise expenses which is particularly important if you have children. It always seems that some unforeseen expense pops up around one of the kid's school activities, or they need new glasses or braces, or something along those lines. Of course if you have an emergency fund in place you can use money from this for such things.

Setting up a proper family budget will not only help you meet your financial goals but will also save money over the long run. Not having money worries will make family life better for all concerned; it just takes a little time and patience.

For those who have never made a budget before a monthly budget planner can be a good way to get your feet wet. Organizing your finances can be an exasperating experience if you've never done it before, but it an important step if you want to win back your financial freedom. Knowing where you money goes and what it does is probably the most important thing you need to control if you want to succeed with money.

Before deciding on which type of budget planner to use it is best to start with a written budget using nothing more then a pencil and paper. This helps you get used to the idea of actually making a personal budget and gives you and idea as to where you stand financially. Writing down all your income and expenses is the first step to getting organized.

Once you are ready to move to something a little more sophisticated you can start using pre-printed budget sheets. These sheets have categories for both income and expenses which can be helpful in organizing your finances. All you have to do as you sort through your bills and check book register is plug your financial information onto the correct line.

These pre-printed spreadsheets can be printed off of internet sites that offer free budget sheets or you can find them at just about any office supply store. The only problem with these sheets is you won't always be able to match your finances to the right category which means you may have to write them in by hand.

If you are good with computer spreadsheet software then you may consider creating your own custom budget using something like Microsoft's Excel. There is an amazing amount of flexibility in using this type of software to build a monthly budget. You can customize it to do just about anything, from tracking monthly income and expenses to tracking retirement accounts, investments, and mortgage amortization rates.

If you aren't of the computer geek mentality don't despair because there are budgeting software programs that already have everything you need right out of the box. The two best well known are Microsoft Money and Quicken by Intuit. These powerful programs can handle just about any financial task you can throw at them. They will even allow you to download your financial information directly from your bank and financial institutions you do business with. From budgeting to financial planning these programs do it all.

As you can see there are quite a few options when it comes choosing a monthly budget planner. No matter which option you choose building a budget is the first step to taking back control of your financial well being.

At the moment, the average expenses of a wedding can amount to as much as $10,000. These are the modest weddings. A number of families know that there are alternatives to a dream wedding. A dream wedding has a nightmare price tag attached to it. But did you know that you can plan a dream wedding on a budget?

If your daughter is about to get married and want to have a dream wedding on a budget, research each opportunity out there that will allow you to save as much as possible. You should also try to look into efforts that can help stretch your buck, especially if you are on a budget.

How to Plan a Dream Wedding on a Budget

1. Start with a plan. Of course you need to plan if you want a dream wedding on a budget. This will make the whole procedure coherent. Regardless it being weeks, months or year, there must be the right amount of time period for the wedding to be planned. This is essential because it makes the whole process organized, less complicated and less daunting. Keep a notebook where you can keep records of the names and phone numbers of people involved. You can also compare prices of your options here while planning a dream wedding on a budget.

2. Books and Magazines. Bridal magazines are a big help in planning a dream wedding on a budget. Problem is, these can be so expensive. You're lucky if you get free copies from department stores, bridal registry desks, floral shops and bridal shops. Better guides offer information on all aspects in the whole engagement, from the planning to the honeymoon. You can take note of your preference, desires, needs and plans. You can mix and match. Take for example, getting inspiration on the bow of one gown, the sleeves from another, and the lace from the third. Just by flipping through these magazines, one may have an idea of what she wants before going off to the dress shops and florists. This will allow her to save money, time and effort to have a dream wedding on a budget.

3. Be your own consultant. Ask yourself if you really need a consultant. If you think that this is not really a necessity, that you can actually make all the planning and the consultation on your own, then you can save money and still have a dream wedding on a budget. If you have the time to figure out the best prices and alternate choices by yourself, then you don't have to spend on bridal consultants' fees. There is a great deal in the prices of printers, florists, bakeries combined. If you visit the one that you will settle for in the end, then you will be able to save hundreds of dollars. If you are opting for a church wedding, then personally go to the church where you want your special day to be held.

4. Be your own wedding planner. The more you read up on weddings, the more you will be able to know what is needed on the special day. A lot of brides-to-be have bridal consultants with them in every step of the way but that can be very expensive. Since you are already on a tight budget, then it would be really practical if you plan the event yourself and have a dream wedding on a budget. Ask around about florists and other stores that can help in decorating the church. You can also be there during rehearsals so that everyone involved will do exactly what you want them to do. Just in case you need help, then you can turn to a close friend or a relative as your assistant.

5. Stick to your budget. That's the most important thing on planning a dream wedding on a budget. Estimate your expenses, the total and the percentage of what you may actually be spending. Budget serves as the guideline. It does not have to be accurate but it enables you to control over the possible expenditures.

Based on statistics, 10% of Americans are spending more than what they are capable of. This results in an average credit card debt of more than $8,000. This shows that many are still not used to budgeting their financial resources and their expenditures.

The very first thing you should do to avoid debts is to identify your sources of income and the things you spend your money on. Knowing this can help you make an accurate plan of where your money should go. This involves planning and forecasting your intended income and expenses so as to prevent financial shortage.

If computing income and expenses is not your forte, using budgeting software is one of the best solutions for you. Budgeting software helps you create a budget plan and follow it effectively. Personal budgeting software has features that can track your spending and reconcile records with your credit card and bank account balances.

Simple budgeting software you can use to budget your personal or family expenses can cost you $10 to $25. This is already cheap considering the benefits it could give you for a long period of time.

Budgeting software is cheaper if you buy it through online software retailers. A basic version may be sold for $30 in a regular retail store while it can be purchased for $25 online. It includes checkbook balancing, tax preparation and expense tracking along with budgeting features.

Downloadable software is cheaper. Fully functional budgeting software with income, savings, and expense tracking features can be downloaded for only $20, while a CD can cost $25.

To ensure that the software has all the features you need, you can try it first for a couple of weeks and see if it can help you efficiently plan your expenditures and keep track of them. Free trial budgeting software is offered by most retailers, usually for 30 days.

It is that time of year again. Yuletide...Christmas in the air. Nostalgia, goose pimples and casting off all financial discipline. It was originally meant to commemorate the birth of Jesus Christ. Joy to the world, and good will to all men...

Then the commercial establishment descended and hijacked the season. The makers of coke dug into the archives, fished out Saint Nicholas, dressed him in its colors with a long white beard, and christened him Santa Claus. It has become:

"Joy to the world, and good sales to all shop owners".

It is the biggest sales season of the year. Shops prepare all year for this moment. To boost sales, high street shops offer some tantalizing price reductions, 50% off, buy one get one free etc. They work on your psyche until you give up the fight, switch your brains off and give in fully to your emotions. There is a nice sounding word for this victory: consumer confidence.
Buy now, regret later.

You must buy new clothes for every member of the household, especially the kids, take them to Santa arcade, and send gifts/hampers/cards to relatives, friends and foes. You must upgrade your living room, get wider screen TV, upgrade your cable subscription, give your home a fresh coat of paint, change the curtains, the list goes on. Buy one, get two free, and suffer buyer's remorse later. It is all in the spirit of the season. You can think of the credit card companies later. You are helping to crank the engine of the economy.

How do you withstand this massive onslaught against your fragile purse strings, this war against the soul of your finances?

Befriend your budget. Run back home and make friends with your budget. Period. The standard advice is, "Make a budget and stick to it". A lot of folks like us have attempted that. If you make a budget and stick with it, you are home safe and dry. This article is not for such lucky folks. It is for folks that are still struggling, budget after budget.

Befriend your budget. A well-made budget is a good sight to behold. The snag is, you have to follow it. That is when the rubber hits the road. This is where most folks take a bow. If your budget is balanced on paper/computer, and unbalanced in reality, something is wrong. That budget is not you. It is an expression of your wishes. There is a communication problem between you and your budget, though you live in the same house. It happens all the time. Married folks will understand what I mean. You guys are speaking in foreign languages.

How do you befriend your budget, and speak the same language?

How can you turn your budget into a friend, rather that a cruel taskmaster?

To attempt to answer these posers, let me tell you a story about two friends: Mr. Nice and Mr. Necessary.

Meet Mr. Nice. An easygoing guy, does not like stress; cares a lot about what others think about him, especially his clique and peers; generally goes with the flow of current trends and fashion; does not like to be the odd man out; does not mind "buy now, pay later"; likes eating out a lot and enjoying the moment to the fullest; hates "cracking" his brain etc. Likeable guy, Mr. Nice...

Now meet Mr. Necessary. Easy going but seriously minded guy; thinks long term; does not care much about public opinion; has a long term focus and is ready to delay immediate gratification; does not care much about trends and fashion; has his eyes on his goal and dreams; does not window shop; would not touch consumer debt with a ten foot long pole etc. Mr. Necessary, seems quite boring to his friends...

Now imagine both guys coming together to form a partnership to float a small-scale business. Sparks will fly, guaranteed. They will forever quarrel about money and expenditure decisions. Now do you still wonder why you are having problems with your budget?

Can these two guys ever get to work together towards a common goal? I think so. It takes a lot of work. All relationships do. Ask your favorite Agony Aunt. Something has to give. If both guys remain in their trenches, then status quo rules... The only way forward is to come to a common ground: an alignment of two different paradigms.

First, get to know your budget. How it thinks and operates, its mindset and idiosyncrasies, modus operandi etc. Then you evaluate your similarities and differences. Then work at bridging the gap. There are three ways of approaching this. Lets call it option A, B and C.

Option A:

Meet your budget all the way. Change your ways and habits, and adapt to suit.

Option B:

Middle of the road option; you give some and your budget gives some. This will entail re-writing your budget to suit the new scenario.

Option C:

You don't move an inch. Your budget comes to meet you. This will also entail re-writing your budget to reflect your current cash flow. Of course you will make provision for deficit financing. You are not making any progress here, but at least you know where you are.

Whichever option you choose, you will end up with a budget that works, a budget in touch your reality. Being frank to yourself is key; if you deceive yourself, you will continue in the merry-go-round. Put your finger on where you need to change, and work on it. Stay focused at you short and long term goals.

Having a budget that works is your only bulwark against the yuletide madness. When you befriend your budget, you form a formidable team.

While making your yuletide budget or wish list, always remember that your November salary is for December expenses and your December salary is for January expenses. It is so easy to forget this in the midst of battle, especially as some employers pay December salary mid month. If you mix it up, you will join the bandwagon of folks that believe that January is the longest month in the year. For them, it is, and their creditors will love them for that...

Joy to the world, and goodwill to all men.

Merry Christmas

Anyone can teach you how to write a budget, but not everyone can teach you how to write a budget to be rich. Writing a budget that will make you rich is actually not a lot harder than writing a regular budget, however, it does require a change in the way that you think. I want to show you how to write a budget so you can be rich, not how to write a budget so you can be poor.

We all know the basics of writing a budget. We know that you have to allocate spending money to different categories. You might allocate $100 to your gas bill, $100 to phone bill, $200 to new clothes, $400 for groceries etc etc. If you want to budget in order to be rich you don't need to change this basic concept of a budget, but there are a few things that you have to change.

You Have To Change What You Spend Your Money On

The major difference between rich people and poor people is what they spend their money on. Rich people spend their money on things that will make them richer, and poor people spend money on things that will make them poorer.

For example, a poor person may have a budget of $5,000 per month (not a bad salary if you ask me). They will then write in their budget to spend all of their money on liabilities (things that take money out of their pocket) such as cars, clothes, food, new technology and other expenses. At the end of the month they will have no money left over to invest. But a rich person on the other hand, they will budget differently to a poor person because what they buy is different. Rich people will buy assets first (assets are things that put money into your pocket), and then they will spend the money the asset generates them (like rental income from a rental unit) on their liabilities (like cars, clothes etc).

So if you you to budget to become rich (instead of poor) then you need to 'Pay Yourself First' and you need to buy assets first, instead of buying liabilities first. Your assets will then generate you passive income and you can buy your liabilities from that income. Then you end up with an asset that is generating you money AND the nice things that you wanted to buy. By paying yourself first you are making yourself richer and richer, but make sure you purchase assets that generate income (not that take income away from you because that is a liability).

You Have To Try To Increase Your Means

Poor people budget in an attempt to live below their means. They want to spend less than they earn by living frugally and save their money. Rich people live by a different set of rules, instead of trying to live below their means they try to expand their means. If you needed to save $1,000 then a poor person would try to spend $1,000 less, and a rich person would try to make $1,000 more. By constantly striving to increase your means (instead of living below them) you are constantly making yourself richer and richer.

The best way to increase your means is by buying assets that generate passive income (income you don't have to work for). This means you don't have to work more in order to earn more, but you can work less and less and earn more and more the more assets you acquire. In order for this to work you need to buy assets that generate you passive income. Positive cashflow real estate is an example of an asset, stock that pay you dividends are assets, and businesses you don't have to work for but that generate you income are also assets. So if you are budgeting to be rich then you need to budget to increase your means, not to just live below them.

You Have To Budget For A Surplus

Poor people budget for a deficit, where they have more cash going out than they have cash going in. In order to try and fix this they try and live below their means and pay off debt. As we use money emotionally, not logically, they try to reduce debt by consolidating their credit cards into their home loan so they pay less interest. Then they have empty credit cards so they go and spend them, further decreasing their cashflow.

Rich people don't budget for a deficit, they budget for a surplus. This means that more cash is coming in each month than is going out. And I want to let you in on a little secret of the rich...you don't have to spend less than you earn to budget for a deficit or to increase your means. For example, a rich person may buy a rental unit that (after all expenses are paid) puts $100 per month into their pocket. They might pay $100,000 for the property using $80,000 of the banks money to buy it. This is a case of spending more than you earn in order to increase your means and budget for a surplus. In this case the rich person is spending $80,000 more than they earn, but their monthly cashflow does not go down because of the debt it goes up $100 per month. They then have an extra $100 per month to spend or invest.

So as you can see, how to write a budget to be rich is not that much different from how to write a budget to be poor. It is the same method of budgeting, but you just have a few different ways of thinking that means your money is managed better and that your money starts to work for you, rather than you having to work for money.

What is a Budget?

A budget is a plan to:

1. Ensure you have enough money for activities in the future.
2. To control and monitor all the finances of the business, including its income and expenses.
3. To enable information to be extracted so the business can make decisions as to direction and growth.

The budget enables the owner of the business to rely on accurate figures that would otherwise have been based around guesswork alone. At any time, the owner should not confuse a budget with a forecast. A forecast is a prediction of the future, whereas a budget is a planned outcome of the future that the business wants to achieve.

What is Business Budgeting?

Most of us do not really think much about it, but we are preparing a budget every time we estimate how much cash we are going to need for a particular purchase and how much money we will have left over at the end of the month after paying our bills. A budget is simply an estimate of what is going to happen in the future as far as our income and our expenditure is concerned.

Business Budgeting is a term often used to mean forward planning in a business. It has, of course, a wider meaning than planning because it also includes coordinating, managing and controlling. In simple language, a business budget is the financial plan of a future period in your business and represents a suggested way or plan of achieving a particular result. It is a means of expressing the goals of your business in financial and monetary terms.

Why Create a Budget?

A budget enhances the chance of success of your business because it estimates your future requirements and predicts a profit position, as well as outlines what your spending should be and how your cash flow should run. The budget is designed to highlight potential problems before they occur, so that you have time to make changes to prevent those problems either getting worse or occurring at all.

Many small business owners run their business totally without setting any budgets because they feel they can make profits even if they don't budget. The fact, however, is that even if the small business is profitable, there is always the possibility that if they used budgets and ran the business closer to the plan of those budgets, their profitability could increase far more than what was achieved without the budgets.

Business Budget is a Financial Business Plan

The process of creating a budget should be simple if there are appropriate systems in place to extract accurate information. A budget is organised in the same way and format as a financial statement such as a revenue statement, or profit and loss, and usually covers a one year or 12 month period. At the end of that year, the estimated results of income and expenses as put down in the budget are compared to the actual performance of the business, as recorded in the financial statements. Budgeting, therefore, expresses the business plans of a business in financial language.

Types of Budgets

The whole budgeting process involves realistic forecasting, monitoring and planning. It requires estimates to be calculated, based on future events, taking into account the information available at the time.

There are many different types of budget.

These include the following budgets:

1. A sales or revenue budget.
2. A purchases budget.
3. A stock or inventory budget.
4. An expenses budget.
5. A profit budget.
6. A cash budget.
7. Break-even budget.
8. Capital funds budget.