Wedding Favors
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Fortune 500 Budgeting For Our Personal Lives
   
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Love My Dentist
I love my dentist! When is the last time you could say that
about yours?
True, dentists do tend to get a bad rap (remember Steve Martin's
sadistic character in the movie, Little .....
I love my dentist! When is the last time you could say that
about yours?
True, dentists do tend to get a bad rap (remember Steve Martin's
sadistic character in the movie, Little .....
January and February are traditionally busy months in the
financial industry as many New Year's resolutions typically
include the goal of becoming debt free or saving for a major
purchase. While many of our clients understand the importance of
getting professional help when managing their business
bookkeeping, only a few think to ask for our services in
managing their personal finances.
In the business world, a budget is a financial framework that
provides checks and balances to prevent overspending and ensures
the availability of funds should the company run into unexpected
trouble and requires capital. These same principles can be
applied to our personal lives.
We are still close enough to the Christmas holidays to
understand how easy it can be to overspend. Presents for the
kids, dinners with family and friends, new clothes for the New
Year's Eve party all can add up to significant debt come
January. I'm reminded of a Visa commercial that typically gets a
lot of airplay in December: The postman comes bearing the
monthly bills. The Visa statement is opened showing a large
listing of purchases all with zero balances and the recipient
can't believe his luck and faints from the shock. The commercial
advertises the Win What You Buy Contest. The more you buy, the
more chances you have to win. A certain recipe for financial
disaster!
While statistically speaking I don't know the chances of winning
the Visa promotion, I haven't met or read about one person who
has. We shouldn't base our spending on the chances of winning
our purchases or even the lottery. With a little common sense
6 Steps To Get "Slightly" Famous
and a trusty calculator, you can manage your spending and saveA few years ago, Bruce Smith experienced a slowdown in his Salt Lake City-based travel agency. Airlines had eliminated his sales commissions. The recession .....
for the future and for unexpected expenses - and feel like
you've won the lottery!
Fortune 500 companies rely on budgeting and financial reporting.
CEOs of major corporations do not make a move without consulting
their financial plan. Revenue and expenses are carefully tracked
and estimates are created for variable expenses. Corporate debt
is studied with the goal of reducing amounts owing without
incurring additional debt. Money is diligently earmarked for
future expenses and rainy days. Almost every financial
expenditure is determined a year before incurred a business
cannot thrive without actively managing its cash flow. Most
people understand that business success relies on creating a
budget and sticking to it. I'm here to tell you that personal
success does too.
Everyone talks about setting up a budget and sticking to it, but
how do you really go about figuring out what your budget is, or
should be? There are a few simple steps to creating a personal
budget. Well use the example of Steve, a computer technician.
1. Calculate your income
Calculate your monthly household income from all sources:
salary, investment income, pension funds, lottery winnings -
both yours and that of your spouse or partner.
Critical Condition: How Health Care In America Became Big Business-And Bad Medicine:
Title: Critical Condition: How Health Care In America Became Big Business-And Bad Medicine:
Authors: Donald L. Barlett and James B. Steele
ISBN: 0 .....
For example, Steve earns $50,000 after taxes annually. He has noTitle: Critical Condition: How Health Care In America Became Big Business-And Bad Medicine:
Authors: Donald L. Barlett and James B. Steele
ISBN: 0 .....
other income. Dividing by 12, Steve calculates his monthly
income as $4,166.67.
2. Determine your ESSENTIAL expenses
Steve has certain fixed monthly expenses. He lists them as: -
Mortgage payment - Groceries - Automobile lease payment -
Automobile Insurance - Utilities - Fuel
3. Calculate a monthly cost for ESSENTIAL expenses.
The expenses that Steve has deemed essential are a mix of fixed
and variable costs. He notes the fixed payments first, assigning
their values as: Mortgage payment$1,300 Automobile lease
payment$ 385 Automobile insurance$ 130
To better gauge his variable expenses, Steve creates an expense
log and records all his purchases for the two-month priors to
setting up his budget. He also examines his old utility
statements to determine his average expenses and is able to
assign the following values: Groceries$ 200 Utilities$ 400
Telephone (incl. Long distance) $ 50 Fuel $ 250
Knowing that his variable expenses are based on an average of
prior expenses, Steve sets aside $200 per month to cover periods
when expenses may be higher than his estimate.
Steve calculates his monthly ESSENTIALS cost as $2,915.00 4.
Determine and calculate your non-essentials
Steve examines the spreadsheet he created for step 3 and
identifies some other common expenses. Entertainment $ 50 Meals
(incl. Daily coffee)$ 100 Gifts (weddings, birthdays, etc.)$ 100
Books and magazines $ 50 Miscellaneous $ 25
Steves monthly non-essential expenses total $325
Steve creates a new spreadsheet with the information he has
calculated thus far. He calculates his disposable income as:
Monthly income: $4,166.67 Less: ESSENTIALS$2,915.00 Less:
Non-essentials $ 325.00 Disposable income$ 926.67
5. Establish monthly contributions towards debt elimination and
savings:
Steve amassed some debt while in school and owes $5,000 on his
credit line. He would also like to purchase a vehicle rather
than lease and plans to take a trip to Europe in two years to
visit family.
He decides on the following monthly contributions: Debt$ 450.00
Savings$ 300.00
Steve deducts his monthly contributions from his disposable
income and is left with $176.67, which he decides to leave in
his checking account to cover other incidentals and
miscellaneous expenses he may have overlooked. He makes a plan,
however, to transfer $500 to his savings account when the
balance in his checking account exceeds $1,000.
Its easy to see that you can write out a plan yourself or use a
software package to set up a budget - no need to hire a
professional accountant. Its important to know where your money
is coming from and where it is going so that you wont have any
unpleasant surprises and maybe just enough money left over at
the end of the day to buy that lottery ticket youve been hoping
for!
2005 Deborah Carraro
About the author:
Deborah Carraro is a Virtual Assistant offering bookkeeping, web
design, desktop publishing and business consulting services. She
publishes a monthly newsletter Vascorp VA Advantage. To
subscribe or find out more, please visit visit http://www.vascorp.com/va