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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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

  • Monitor, review, revise after each period.


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

  • Select recordkeeping format

  • Use cash or accrual basis

  • Select budget classifications

  • Select time periods


  • Decision-Making Phase of Budgeting

  • Inflation and other economic factors

  • Realistic budget estimates

  • Reconciling initial estimates


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

  • Stay on target

  • Check progress

  • Be alert to problems or errors

  • REASONS FOR BUDGET CONTROLS:


Use a checking account

Employ a credit control sheet

Check accuracy

Monitor unexpended balances

Control Phase of Budgeting

  • BUDGET CONTROL MEASURES:


Justify exceptions

Use the envelope system

Employ subordinate budget

Control Phase of Budgeting

  • BUDGET CONTROL MEASURES:


Compare estimated and actual amounts

Decide how to handle balances

Assess progress toward goals

Evaluation Phase of Budgeting


Unilateral

Shared

Divided

Discussions About Money

  • MONEY MANAGEMENT AND FINANCIAL DECISION MAKING FOR COUPLES:


More income/more expenses

Reliance on “second” income

Discretionary account for each individual

Discussions About Money

  • COMPLICATIONS FOR DUAL-EARNER HOUSEHOLDS:


Discussions About Money

  • Child support

  • Alimony

  • His/Her/Our children

  • His/Her funds

  • COMPLICATIONS BROUGHT BY REMARRIAGE:


Discussions About Money

  • Freedom

  • Trust

  • Self-esteem

  • Guilt

  • EMOTIONS AND MONEY:

  • Indifference

  • Envy

  • Security/Comfort

  • Power/Control


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 MoneySense in Children

  • Give access to money

  • Give freedom to save and spend

  • Teach responsibility

  • Allow freedom to fail

  • Talk about family finances


Your PersonalSpending Style

  • Givers

  • Me-spenders

  • Big-spenders

  • Tightwads

  • Normal People


Couples Should DiscussPersonal Finances

  • Child bearing

  • Employment

  • Food and clothing

  • Housing and transportation

  • Recreation and vacations

  • Future security and debt


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