Financial Planning and Cash Management by zfo57721

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									Budgeting and Cash Flow Management
               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

• 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

• Perform the tasks of the evaluation phase
  of budgeting.

• Explain the techniques of talking
  effectively about money.
Budgeting and Cash-Flow Management

       IF YOU FAIL TO PLAN,
         YOU PLAN TO FAIL!

 To succeed in money matters requires
   implementation of financial plans.
Financial Planning and Budgeting


• Financial planning

• Budgeting

• Values

• Goals
 Comparison of Statements

  PAST        PRESENT   FUTURE


Income and
              Balance   Budget
  Expense
               Sheet
 Statement
(Cash Flow
 Statement)
    Six Phases of Budgeting


                                                                 Achieve
                                                                 success in
                                                                 financial
                                                      Evaluate
                                                                 goals

                                            Control


                                Implement

                       Decide                                          Monitor,
                                                                    review, revise
            Organize                                                  after each
                                                                       period.
Set Goals
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

REASONS FOR BUDGET CONTROLS:

 • Stay on target

 • Check progress

 • Be alert to problems or errors
   Control Phase of Budgeting

BUDGET CONTROL MEASURES:

 • 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
  Evaluation Phase of Budgeting


• Compare estimated and actual amounts

• Decide how to handle balances

• Assess progress toward goals
    Discussions About Money

MONEY MANAGEMENT AND FINANCIAL
DECISION MAKING FOR COUPLES:


 • Unilateral

 • Shared

 • Divided
   Discussions About Money

COMPLICATIONS FOR DUAL-EARNER
HOUSEHOLDS:


 • More income/more expenses

 • Reliance on “second” income

 • Discretionary account for each individual
      Discussions About Money

COMPLICATIONS BROUGHT BY
REMARRIAGE:


 •   Child support
 •   Alimony
 •   His/Her/Our children
 •   His/Her funds
     Discussions About Money

EMOTIONS AND MONEY:

• Freedom       • Indifference

• Trust         • Envy

• Self-esteem   • Security/Comfort

• Guilt         • 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 Money
         Sense 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

• Givers

• Me-spenders

• Big-spenders

• Tightwads

• Normal People
        Couples Should Discuss
          Personal Finances


• Child bearing
• Employment
• Food and clothing
• Housing and transportation
• Recreation and vacations
• Future security and debt

								
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