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Budgeting and Cash Flow Management

Budgeting and Cash Flow Management. PRESENT. Balance Sheet. Comparison of Statements . PAST. FUTURE. Income and Expense Statement (Cash Flow Statement). Budget. Set Goals. Organize. Decide. Implement. Control. Evaluate. Six Phases of Budgeting . Achieve success in financial goals.

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Budgeting and Cash Flow Management

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  1. Budgeting and Cash Flow Management

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

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

  4. 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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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