Budgeting and Cash Flow Management

1. Budgeting and Cash Flow Management

2. 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

3. 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

4. Perform the tasks of the evaluation phase of budgeting. Explain the techniques of talking effectively about money. Objectives

5. IF YOU FAIL TO PLAN, YOU PLAN TO FAIL! To succeed in money matters requires implementation of financial plans. Budgeting and Cash-Flow Management

6. Financial planning Budgeting Values Goals Financial Planning and Budgeting

7. PRESENT Balance Sheet Comparison of Statements PAST FUTURE Income and Expense Statement (Cash Flow Statement) Budget

8. Set Goals Organize Decide Implement Control Evaluate Six Phases of Budgeting Achieve success in financial goals Monitor, review, revise after each period.

9. 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

10. Organization Phase of Budgeting • Select recordkeeping format • Use cash or accrual basis • Select budget classifications • Select time periods

11. Decision-Making Phase of Budgeting • Inflation and other economic factors • Realistic budget estimates • Reconciling initial estimates

12. Implementation Phase of Budgeting • Recording actual income/expenditures • Managing with a cash-flow calendar • Utilizing a revolving savings fund • Calculating time-period totals

13. Control Phase of Budgeting • Stay on target • Check progress • Be alert to problems or errors • REASONS FOR BUDGET CONTROLS:

14. Use a checking account Employ a credit control sheet Check accuracy Monitor unexpended balances Control Phase of Budgeting • BUDGET CONTROL MEASURES:

15. Justify exceptions Use the envelope system Employ subordinate budget Control Phase of Budgeting • BUDGET CONTROL MEASURES:

16. Compare estimated and actual amounts Decide how to handle balances Assess progress toward goals Evaluation Phase of Budgeting

17. Unilateral Shared Divided Discussions About Money • MONEY MANAGEMENT AND FINANCIAL DECISION MAKING FOR COUPLES:

18. More income/more expenses Reliance on “second” income Discretionary account for each individual Discussions About Money • COMPLICATIONS FOR DUAL-EARNER HOUSEHOLDS:

19. Discussions About Money • Child support • Alimony • His/Her/Our children • His/Her funds • COMPLICATIONS BROUGHT BY REMARRIAGE:

20. Discussions About Money • Freedom • Trust • Self-esteem • Guilt • EMOTIONS AND MONEY: • Indifference • Envy • Security/Comfort • Power/Control

21. Talking About Financial Matters • Get to know yourself and partner • Learn to manage disagreements • Use “I” not “you” statements • Focus on commonalties • Be honest

22. Develop MoneySense in Children • Give access to money • Give freedom to save and spend • Teach responsibility • Allow freedom to fail • Talk about family finances

23. Your PersonalSpending Style • Givers • Me-spenders • Big-spenders • Tightwads • Normal People

24. Couples Should DiscussPersonal Finances • Child bearing • Employment • Food and clothing • Housing and transportation • Recreation and vacations • Future security and debt