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Budgeting and Cash Flow Management. Describe the relationship between financial planning and budgeting. Understand how to set and achieve long-and short-term financial goals. Establish the structural and mechanical aspects appropriate for your personal budget. Objectives.

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Presentation Transcript
objectives
Describe the relationship between financial planning and budgeting.

Understand how to set and achieve long-and short-term financial goals.

Establish the structural and mechanical aspects appropriate for your personal budget.

Objectives
objectives1
Resolve conflicting financial needs and wants.

Describe the key aspects of the implementation phase of budgeting.

Illustrate the methods and techniques to keep income and expenditures within planned budget totals.

Objectives
objectives2
Perform the tasks of the evaluation phase of budgeting.

Explain the techniques of talking effectively about money.

Objectives
budgeting and cash flow management1
IF YOU FAIL TO PLAN,

YOU PLAN TO FAIL!

To succeed in money matters requires implementation of financial plans.

Budgeting and Cash-Flow Management
comparison of statements

PRESENT

Balance Sheet

Comparison of Statements

PAST

FUTURE

Income and Expense Statement (Cash Flow Statement)

Budget

six phases of budgeting

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
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
slide11

Decision-Making Phase of Budgeting

  • 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