Budgeting and Cash Flow Management
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Budgeting and Cash Flow Management. PRESENT. Balance Sheet. Comparison of Statements . PAST. FUTURE. Income and Expense Statement (Cash Flow Statement). Budget. Set Goals. Organize. Decide. Implement. Control. Evaluate. Six Phases of Budgeting . Achieve success in financial goals.

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Presentation Transcript

Comparison of statements

  • Balance Sheet

Comparison of Statements

  • PAST

  • FUTURE

  • Income and Expense Statement (Cash Flow Statement)

  • Budget


Six phases of budgeting

  • Organize

  • Decide

  • Implement

  • Control

  • Evaluate

Six Phases of Budgeting

  • Achieve success in financial goals

  • Monitor, review, revise after each period.


Financial goal setting phase of budgeting
Financial Goal-Setting Phase of Budgeting

  • Setting long-term goals—anything more than 12 months away.

  • Developing short-term goals from long-term goals

  • Prioritizing goals

  • Making goals time and dollar specific


Organization phase of budgeting
Organization Phase of Budgeting

  • Select recordkeeping format

  • Use cash or accrual basis

  • Select budget classifications

  • Select time periods


  • Inflation and other economic factors

  • Realistic budget estimates

  • Reconciling initial estimates


Implementation phase of budgeting
Implementation Phase of Budgeting

  • Recording actual income/expenditures

  • Managing with a cash-flow calendar

  • Utilizing a revolving savings fund

  • Calculating time-period totals


Control phase of budgeting
Control Phase of Budgeting

  • Stay on target

  • Check progress

  • Be alert to problems or errors

  • REASONS FOR BUDGET CONTROLS:


Control phase of budgeting1

Use a checking account

Employ a credit control sheet

Check accuracy

Monitor unexpended balances

Control Phase of Budgeting

  • BUDGET CONTROL MEASURES:


Control phase of budgeting2

Justify exceptions

Use the envelope system

Employ subordinate budget

Control Phase of Budgeting

  • BUDGET CONTROL MEASURES:


Evaluation phase of budgeting

Compare estimated and actual amounts

Decide how to handle balances

Assess progress toward goals

Evaluation Phase of Budgeting


Discussions about money

Unilateral

Shared

Divided

Discussions About Money

  • MONEY MANAGEMENT AND FINANCIAL DECISION MAKING FOR COUPLES:


Discussions about money1

More income/more expenses

Reliance on “second” income

Discretionary account for each individual

Discussions About Money

  • COMPLICATIONS FOR DUAL-EARNER HOUSEHOLDS:


Discussions about money2
Discussions About Money

  • Child support

  • Alimony

  • His/Her/Our children

  • His/Her funds

  • COMPLICATIONS BROUGHT BY REMARRIAGE:


Discussions about money3
Discussions About Money

  • Freedom

  • Trust

  • Self-esteem

  • Guilt

  • EMOTIONS AND MONEY:

  • Indifference

  • Envy

  • Security/Comfort

  • Power/Control


Talking about financial matters
Talking About Financial Matters

  • Get to know yourself and partner

  • Learn to manage disagreements

  • Use “I” not “you” statements

  • Focus on commonalties

  • Be honest


Develop money sense in children
Develop MoneySense in Children

  • Give access to money

  • Give freedom to save and spend

  • Teach responsibility

  • Allow freedom to fail

  • Talk about family finances


Your personal spending style
Your PersonalSpending Style

  • Givers

  • Me-spenders

  • Big-spenders

  • Tightwads

  • Normal People


Couples should discuss personal finances
Couples Should DiscussPersonal Finances

  • Child bearing

  • Employment

  • Food and clothing

  • Housing and transportation

  • Recreation and vacations

  • Future security and debt


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