Guide To Financial Budgeting - Excel Models Included

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** Financial Budgeting with Excel Models ** A comprehensive guide to self financial budgeting, this document goes through eight different steps to help the individual fill out their budgeting plans. It also includes an easy guide on constructing an excel worksheet that will allow the user to easily access and change their inputted data. This guide can be use for personal and business owners. It will help the user figure out their goals and objectives.

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									Guide To Financial
Budgeting
8 Easy Steps for Personal Use




2010


                                *Excel Models Included*
                   FINANCIAL BUDGETING




Table of Contents

Introduction……………………………..…………………………………………………………… Page 3



Budget Steps…………………………………………………………………………………..………Page 4

       Step 1: The Summary…...……..……………………………………………………………. Page 4

       Step 2: The Objectives……………...………………………………………………………. Page 4

       Step 3: Gather Financial Statement..…...…………………………………………………….Page 5

       Step 4: Record Your Income………………..………………………………………………. Page 5

       Step 5: Record Your Expenses………….……..……………………………………………. Page 6

       Step 6: Input Data in Excel.………………………..…….…….………………………. Page 7 & 8

       Step 7: Adjustment………………………...…………...…………………………………….Page 9

       Step 8: Assumptions Made…………………...……………..………………………………. Page 9



Conclusion ……………………………………………………………..…………………………. Page 10




© Copyright 2010 Docstoc Inc.                                    2
                   FINANCIAL BUDGETING
Introduction:

        In these tough economic times, people need to review their finances. Budgeting is
important no matter the situation a person is in their lives; whether they are changing careers,
just been laid off, have a new born, or kids going off to college. To achieve financial security
you should follow the steps and tools stated in this guide. “Budgeting” nowadays is viewed as a
negative word, and most people fear sitting down to structure their finances. Most connotations
associated with the word budgeting, implies „restriction‟ „no more spending‟ „constraint‟ or
„limited,‟ but that is not true. Think of budgeting as a spending plan, a way to get control of your
finances. By thinking of budgeting in positive ways, you will be able to relieve some of the stress
associated with planning.


This guide is meant to help you create a budget for your personal and business use. Performing a
budgeting lies at the foundation of every financial plan and by constructing a budget worksheet,
it will allow you to make prediction about where you or your company will stand financially in
the future.


With the help of this guide you will be able to plan your future, whether you are moving,
purchasing a home, changing careers or jobs, or making other major changes in your life. Budget
planning is essential to a successful future.




© Copyright 2010 Docstoc Inc.                                                            3
                   FINANCIAL BUDGETING

Budget Steps:

Step 1: The Summary
       The beginning of the budget planning should include a summary that gives the „big
picture’ and highlights the key information in the budget planning. You want to tackle budgeting
the right way, so you will need a very well defined plan. Below are some questions you should
ask yourself while writing your summary:
   1. Where do you want to be financially in 1 month, 6 month, 1 year, and 5 years?
   2. When do you want to retire?
   3. Are you happy with your standard of living?
   4. Do you have any children going off to college?
   5. How much money do you have saved for emergency?


We will be using Microsoft Excel 2003/2007 to show you how to budget your finances.


Step 2: The Objectives
       The goal is to establish a list of objectives in the budgeting worksheet, to help guide your
achievements. Make sure you create small time-frame goals that you can achieve in a few
months. Type your objectives in excel, like illustrated below:



           Objectives

                      Objective 1

                      Objective 2

                      Objective 3

                      Objective 4

                      Objective 5




© Copyright 2010 Docstoc Inc.                                                           4
                   FINANCIAL BUDGETING

Step 3: Gather Financial Statements
       Upon understanding the goals and objectives of the budget plan, you have to gather all
financial statements. You have to collect:
                          Investment Accounts.
                          Bank Statements.
                          Utility Bills.
                          Any documents concerning a source of income or expense.
Your goal is to create a monthly average, so gather as much information as you can about your
finances.


Step 4: Record Your Income
       Recording all of your sources of income is an important step in your budgeting process.
You should record the total income as a monthly amount.
   -   Note: Be sure to also include any income coming in your household if you are self-
       employed or have outside source.
   -   Note: If you receive regular paycheck, make sure to use the net income amount.


                                   Monthly    Monthly
                                   Budget      Actual
                                   Amount     Amount    Difference
Revenues:
            Wages                      X         X          X
            Bonuses                    X         X          X
            Investment Income          X         X          X
            Interest Income            X         X          X
            Miscellaneous Income       X         X          X
            Federal Income Tax         X        X           X
            State and Local Income TaxX         X           X
                                       X
            Social Security/Medicare Tax        X           X
            Total Revenue              0        0           0




© Copyright 2010 Docstoc Inc.                                                        5
                   FINANCIAL BUDGETING
Step 5: Record Your Expenses
       Recording all of your expenses is also an important step in your budgeting process. This
should include essentially everything you spend. Make sure you separate your expenses into two
different categories; fixed and variable expense. Fixed expenses are those that stay relatively the
same each month, as opposed to variable expenses, which changes on monthly basis. You will
need to make a note of your variable expense, because these are the expenses that will be
important for later adjustment, if needed.


                                                       Monthly    Monthly
                                                       Budget      Actual
                                                       Amount     Amount     Difference
Expenditures:
          Fixed Expenses:
          Home Mortgage or Rent                           X           X          X
          Property Tax                                    X           X          X
          Utilities                                       X           X          X
                     Electricity                          X           X          X
                     Water and Sewer                      X           X          X
                     Natural Gas or Oil                   X           X          X
          Health and Medical                              X          X           X
          Debt Payments                                   X          X           X
                     Student Loan                         X          X           X
                     Credit Cards                         X          X           X
                     Other Loans                          X          X           X
          Investments and Savings                         X          X           X
                     IRA/ 401(K)                          X          X           X
                     Stocks/Bonds/Mutual Funds            X          X           X
                     College Fund                         X          X           X
                     Savings                              X          X           X
                     Emergency Fund                       X          X           X
          Family Obligations                              X          X           X
          Variable Expenses:
          Food                                            X           X          X
          Transportation                                  X          X           X
          Clothings and Entertainment                     X           X          X
          Miscellaneous                                   X           X          X
          Total Expenditures                               0          0          0




© Copyright 2010 Docstoc Inc.                                                             6
                   FINANCIAL BUDGETING
Step 6: Input data in Excel 2003/2007
       Input all of the collected date into an excel worksheet. Start with „Revenues‟ and list the
specific line item. Than list all of your „expenditures‟ and total them. Once you have your total
revenue and total expenditures, find the difference.
   -   Note: Make sure to have all the amounts of income and expense into monthly basis.




                                      [Please look at page 8]




© Copyright 2010 Docstoc Inc.                                                           7
                   FINANCIAL BUDGETING
Financial Budgeting
                                                 Monthly   Monthly
                                                 Budget     Actual
                                                 Amount    Amount    Difference
Revenues:
            Wages                                   X         X          X
            Bonuses                                 X         X          X
            Investment Income                       X         X          X
            Interest Income                         X         X          X
            Miscellaneous Income                    X         X          X
            Federal Income Tax                     X         X           X
            State and Local Income Tax             X         X           X
            Social Security/Medicare Tax           X         X           X
            Total Revenue                          0         0           0

Expenditures:
          Fixed Expenses:
          Home Mortgage or Rent                     X         X          X
          Property Tax                              X         X          X
          Utilities                                 X         X          X
                     Electricity                    X         X          X
                     Water and Sewer                X         X          X
                     Natural Gas or Oil             X         X          X
          Health and Medical                       X         X           X
          Debt Payments                            X         X           X
                     Student Loan                  X         X           X
                     Credit Cards                  X         X           X
                     Other Loans                   X         X           X
          Investments and Savings                  X         X           X
                     IRA/ 401(K)                   X         X           X
                     Stocks/Bonds/Mutual Funds     X         X           X
                     College Fund                  X         X           X
                     Savings                       X         X           X
                     Emergency Fund                X         X           X
          Family Obligations                       X         X           X
          Variable Expenses:
          Food                                     X          X          X
          Transportation                           X         X           X
          Clothings and Entertainment               X         X          X
          Miscellaneous                             X         X          X
          Total Expenditures                        0         0          0
Revenues - Expenditures                             0         0          0




© Copyright 2010 Docstoc Inc.                                                8
                   FINANCIAL BUDGETING

Step 7: Adjustments
       If your income is greater than your expenses, you are off to a great start. You can now
prioritize the excess area and move more funds into other line items that are more necessary and
important (savings, retirement fund, paying off debt, etc).
       If your expenses are greater than your income, it means you have to make some changes
in your lifestyle to accommodate your budget. You goal should be to reduce expense, so start off
by looking at your variable expenses.


       Your ultimate goal in financial budgeting is to have your expense and income rows to be
equal. You want all of your income to be accounted for and budgeted for a specific expense item.




Step 8: Assumptions Made
       Make sure to include assumptions made behind your budget estimates in your worksheet.
And also, include explanations on significant changes in your line items. You also need to make
sure your objectives, stated earlier, are in line with your financial budget status.




© Copyright 2010 Docstoc Inc.                                                          9
                   FINANCIAL BUDGETING

Conclusion:

It is important to view your financial budget every month to make sure you stay on track. And
always have a positive attitude. Tackling your budget is a daunting task, but if you are motivated
and keep a realistic expectation you will be able to finish you goals and reach financial stability
and health. Many people after creating a budget plan, abandon it soon after. Avoid this mistake
by involving your family in the process. They are a great backbone and will help you when you
need it. Your goal should be to discuss finances with every member of your family and to hold
meetings on regular basis. If every family member understands their impact of their spending, it
will help the family as a whole to develop good spending habits. By following the steps given in
this guide, you will be one step closer to financially sound lifestyle.




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