Savings and Budgeting Essay
Savings and Budgeting
* The effectiveness of Saving After long periods of meditation on both topics I was lead to believing that I needed to acquire an active example of Budgeting against Savings which is taking place in the wider society at the present moment before drawing any further conclusions about either of them, but my personal understanding of both wise financial ideas is “Budgeting is useless without saving and saving is nothing without budgeting. ” With me being a child the only place I have access to such displays is in the school system, which is Glenmuir High for me.
In this school I am exposed to people of different racial and ethnic groups which all have specific views about the financial aspects of their individual lives . The less fortunate would focus on things they need instead of what they want ,with this concept budgeting can be carried out flawlessly opposing to savings . The money you have will eventually be spent on crucial things in your life and such a way to make use of the little financial aid is to budget ,when you budget, the money is still spent but now you are fully aware of where exactly your money is and here it is going at all times.
If you save the money the money will not be spent so you will accumulate your money overtime, but after the savings contract is completed prior to the withdrawal from the institution, if not taken into consideration the money will disappear via squandering because a budget was not in place to prevent such incidents. Budget refers to setting aside money and making plans for future uses. It’s like making a ‘Time table’ for your money. Using this method of conservation it can help you to achieve long term as well as short term goals in the form of budget to save.
As a person interested in budgeting it can be done easier or more efficiently if the subject earns or receive a flat rate at regular intervals. If so the money can be divided into separate portions, these proportions may include: * Savings * Needs * Wants Savings, needs and wants are three things every individual alive has when referring to saving it may not be monetary related however it still is a person’s prize possessions. In order to obtain these things a particular strategy must be introduced. The most suitable way I can think of is budgeting.
Saving can also be used to achieve these goals but will carry them out as budgeting would do. Budgeting is used by everyone at some point in their lives some more often than others especially if their duties involve sharing or allocating resources to make a living from it or just distributing stuff instead. Budgeting enforces an in depth understanding to show where money is being spent at all times. It helps to reduce debt troubles. There is also a lot of tools available to effectively carry out budgeting. The first and most important step to effective financial planning is developing and implementing a budget.
That of course sounds easy and even simplistic to some extent, but that is obviously not the case as illustrated in our wider society today. A budget can be created in various ways, since nowadays we use all kinds of things to aid our ability to think. There are numerous charts, soft wares and all kinds of programs to help you create a budget. They are all good sources but all that you really need is a note book, a pencil, and a small calculator. Once you have these tools then you can sit down and annotate everything that you spend money on in a month, list them in order of importance). then you can start adding figures to your labels then you need to know where you are spending every penny of your money. This may take more than one sitting, because you may have to track your expenditures for a while, possibly a whole pay period. Keep all your receipts. Ascertaining your monthly bills shouldn’t be a problem. You know what your mortgage and car payments are along with your utility bills. It’s the money that seems to slip away from you with nothing to show for it that you really need to concern yourself with.
This is the area that you need to track. If your debt is already out of control, it will be a little harder to implement a budget. However, its undoubtedly important that you begin a budget or improve previous one if you are in debt . Without one, its virtual certainty that you’ll never be able to live without debt . A budget forces you to get your spending under control, to live within or below your financial limits until debts are paid off (if there is one) . Only then will you free up money that can go towards reducing and eliminating your debt.
Once you are aware of what you’re spending your money on, you’ll be able to put it down on paper and label them with the different categories of your spending. Make a column for everything; minor items can be combined into a miscellaneous spending column. These small items may not cost a high price on their own but when these unnecessary stuff are altogether combined they attract a high value. Allocate your available funds to cover your necessary bills first. As they’re paid, keep track of them on your budget sheet. Do not allocate as much of your money to miscellaneous expenditures as you have been previously been doing.
For example, if you’ve been spending $200 per month on entertainment, only allocate $100 to such projects in your budget. Then once you’ve spent your allocated amount, don’t spend any more for that column. It takes discipline, but it’s well worth it. The money that you’ve saved can go towards paying down the principal of your debts, or into a savings or investment account. It will be difficult at first , but most behavioral changes are hard to follow too. You’re changing your mindset and attitude toward your money, and that takes time, but the longer you do it the easier it becomes. t won’t be too long before your budget has become a habit. With your spending under control, you’ll be well on your way to meeting your long-term financial goal.
In its simples form, budgeting simply means to live within ones financial means. This is in sharp contrast to the prevailing lifestyle of living beyond your means and the way in which we humans live beyond our means is by credit or borrowing. Capital budgeting is a process that attempts to determine the future. Before any large projects begin, the capital budgeting process should be utilized. Without capital budgeting your company could make a fatal mistake.
Here are four strategies that can be used to make budgeting work: 1. Identify Opportunities As a business owner or entrepreneur, you are often presented with many different potential opportunities. You could go in a number of different directions as a company. in this first step you have to distinguish and recognize what is available at this specific time span before any decisions can be made. 2. Asses Opportunities Once you have identified the possible opportunities for your business, the next step in the process is to asses each opportunity individually.
You should compare each opportunity against your vision for the company and the mission statement or your personal philosophy. Many potential opportunities can be eliminated in the step before you can get financial information. You want to only pursue opportunities that match your business plan. 3. Cash flow Assessment Another vital part of the capital budgeting process is cash flow assessment. When looking at a new project, you need to come up with a cash flow plan for it. You should estimate the amount of cash it will require to complete the project and how much cash it should take going forward.
This often requires the consultation of several different experts. The second part of the cash flow assessment process helps you to determine how much revenue the project could bring in. When calculating these numbers do not use best case scenarios, use numbers that are realistic. This part of the process helps you to determine whether the project is available or not. 4. Making Decisions Ultimately, the objective of capital budgeting is to help you make decisions that are smart to allow your business to make progress.
Taking the necessary steps to evaluate each opportunity can help you avoid disastrous consequences for your business. If these steps are not taken, you can take on a project that does not bring any values or revenues to your company. Ultimately, it could prove to be the last mistake your company remakes. Therefore the capital budgeting process is crucial to consider before making any big decisions for any type of project. Ashdane Beckford In this project the information provided was a mixture or my Principles of Business notes and also my Principles of Accounts notes too, along with the aid of Google. com
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 24 October 2016
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