Abstract
A brief description of a basic utilization of the various budgets and the components within.
Personal Finance Week 4: BudgetWhat financial tools described in this chapter can help you make better financial decisions?
The financial tools described in chapter 5 are budgets. A budget is a financial tool that can be likened to the financial planning process. A budget involves six primary components "defining goals and gathering data; forming expectations and reconciling goals and data; creating the budget; monitoring actual outcomes and analyzing variances; adjusting budget, expectations, or goals; redefining goals." (p.89 ) When assessing all of the afore mentioned components one must be sure to weigh each measure conservatively, that is to say overestimate costs while underestimating earnings. The final crucial aspect of the budget is time. The time needs to be long enough to limit the amount of data without neglecting to input vital data. When a budget takes in account all of the variables in one's
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It is comprised to two main components. These components are the operating budget and the capital budget. The purpose of the operating budget is to reflect the daily "recurring income and expenses, i.e., living expenses and incomes from wages, interest, and dividends, usually related to short-term goals." In keeping with the conservative theme it is wise to not list any irregularly recurring income. Generally for personal budgets a month is a popular time period but for a budget to reflect a more accurate depiction of uncertainty a period of one year is suggested. The operating budget should not only consist of your financial history but in order to be a true a reflection of daily life such should always be adding new information including micro factors (age, family structure, health, career choice) and Macro factors (economic cycle, unemployment,
Operating budgets are budgets that deal mainly with the day-to-day operations of a facility. This may include wages, utilities, rent, and items purchased that have the intent of lasting less than a year (Johnston, n.d). This type budget provides the needed information regarding the cash on hand needed to operate the facility during a fiscal year. Capital expenditure budgets deal with more long term items such as equipment or property. As stated by Johnston (n.d.), it is necessary to have a capital budget for continued growth of the business. You complete this task by purchasing assets that produce an income. Capital expenditure budget have the potential to cover a five- to ten-year period (Baker & Baker, 2014, p.174). Items included in the capital expenditure budget may also include loan interest and bondholder's interest. The operating budget and the capital expenditure budget interact with one another. To demonstrate an example: a healthcare facility purchases a chemistry analyzer for its clinical laboratory. The chemistry analyzer is placed in the capital expenditure budget, but the maintenance for the analyzer is placed in the operational budget. The capital expenditure expense is the chemistry analyzer, but the materials used to maintain the chemistry analyzer are operational expense.
The country needs to start monitoring how the government is spending the federal budget and they need to start splitting it fairly to benefit our country. 83% of the federal budget is spent on the Big Five which are the main expenses in the budget. We have to stop spending it all on the Big Five. Our government should really pay attention to what we need most of in this country and focus on the needs. The government needs to take away 20% of the Big Five and split it to categories that need it.
The main purpose of the Balanced Budget and Emergency Deficit Act of 1985, which is broken down into five parts: Part A-Congressional Budget Process Part B- Budget Submitted by the President and Part C- Emergency Powers to eliminate Deficits in Excess of Maximum Deficit Amount, Part D- Budgetary Treatment of Social Security Trust Funds, and Part E- Miscellaneous and Related Provisions, is to provide a reduction in the deficit to zero within the five years that it is enacted (1986-1991); by increasing the debt ceiling between and limited to $1,847.800,000,000 or $2,078,700,000,000 by and after the 1st of October in 1985. The purpose of the acts was to eliminate the deficit of the United States federal budget, which was, at the time, the highest
(Cronkhite, 2013) All organization requires specific planning and a clear understanding of the organization object. (McHatton, Bradshaw, Gallagher, & Reeves, 2011) With the budgeting which ensures that the funds necessary to carry out the organizational activities and once the budget is approve operational activities are conducted within the approved plan. (Cronkhite, 2013) The Capital budget contains large items since as location or a new building. (Cronkhite, 2013) This type of budgeting is done until the organization or project is complete. (Cronkhite, 2013) Line item budget is those items that are needed yearly in order to the organization to operate. (Cronkhite, 2013) This includes employee salaries all the way down to office basic stationery. (Cronkhite, 2013) The budgeting process is not something that is done once a year; it is a continual process of regular review and in some case possible for revision. (Cronkhite, 2013) In some case a zero based budgeting comes into play. This type of budgeting is also known as the “died of its own weight”. (Cronkhite, 2013) This is only done if there is a reduction in the organization by at 5%, 10% or 20% on how the essential programs would continue to function. (Cronkhite,
Budget Development Olha Storozh Chamberlain College of Nursing NR533: Financial Management in Healthcare Organizations November, 2017 In today’s day and age of big data and statistics, organizations require effective ways of combining it in order to create an effective budget. Countless studies have shown that with an appropriate nurse staffing, patient outcomes improve. Only with proper fiscal management and responsibility can a hospital really provide the highest quality of service to its patients. This paper will review methods of creating an effective budget as well as analyzing and improving the budget sample of the St Louis Medical Center (SLMC) cardiac unit,
Budgetary planning may differ between organizations. Single-period budgets and rolling budgets have methodologies that provide advantages and disadvantages that may make one budget time frame better than another. A single-period may require less time in planning during a fiscal year, but is less accurate than a rolling budget that is continuously planned on a repetitive basis. In either case, budgets are planned in advance in order for a company to operate profitably, and less so to have "actual results equal budgeted results." (p. 496)
A comprehensive budget is one that covers both recurring, and non-recurring incomes and expenses, so it covers all areas of finances. The comprehensive budget is comprised of both the operating budget, and the capital budget. The operating budget is important because it reflects the recurring income and expenses. That includes living expenses and income from wages, dividends, and interest. The purpose of this is to reflect the short term lifestyle choices. This would be a good way to see if maybe you are living beyond your means, or if maybe you should spend less money going to clubs, or on vacation. Golf memberships cost a pretty penny, and if you are finding it hard to pay your dues, this is a good way to see if maybe you just can’t afford
Budget is an estimate of income and expenses for a particular period of time. It is also a projection of the financial requirements and consequences of a plan (Siegel & Yacht, 2009). There are different types of budgets, comprising of various components. Each of these components serves different purposes and are related to one another. In order to make better personal financial decisions, financial tools are required.
When Storm’s founder likened his model of financial planning to that of a Big Mac or a Ford production line, I think that he was referring to the quality of the products on offer. He is comparing his model of financial planning to the fact that people pay money for poor quality food and poor quality cars, just as they pay money for poor quality financial planning through Storm Financial. The Storm advisers breached their AFSL obligations because did not get to know their client. They offered the same advice to each of the clients, which resulted in great losses because they did not look at the needs of each individual client.
Quantitative plans are called budgets. Budgets are prepared to impose cost controls on the activities of an organization (Chenhall, 1986).Budgets are then used to evaluate the performance of the management and budget itself is considered as a standard to evaluate the performance Solomon, 1956). The purpose of the budget is also to implement the strategy of the organization and communicate it to the employees of the organization Rickards (2006). The change in the external environment has led to the change in the budgeting approaches from the initial cash based budgets to the zerio based budgets (Bovaird, 2007).
A budgetary estimate is used to allocate money into an organization's budget. Many organizations develop budgets at least two years into the future. Budgetary estimates are made one to two years prior to the software project completion. The accuracy of budgetary estimates is typically ten percent below to twenty-five percent above the actual final cost of the project.
Dickinson, G. (2004). Budgeting as easy as 1-2-3: How to ask for- and get- the money you need. Library Media Connection, 22, (6). 14-17.
Also, I have created a long term data sheet which gives me a visual of the past six months to give me enough data to see a true spending trend and to allow me to adjust out anything is that too far out of proportion to the other expenditures. The short term data sheet show me where I am at for the past six weeks and allows me to see if I am spending too much in certain areas on a short term
Budget is combining your income and expenses to decide how much money you are going to spend on an item. Budget is an important step to determine your financial health and financial stability. It’s an important financial tool because it can help plan for expenses, cut cost were unneeded, save for future goals, plan for emergencies that occur inexpediently, and list what you are spending and saving.
It requires an adequate and sound organizational structure, that is, there must be a definite assignment of responsibility for each function of the enterprise. Budgeting compels all the members of management, from the top to bottom to participate in the establishment of goals and plans. Budgeting compels departmental managers to make plans in harmony with the other departments and of the entire enterprise. Budgeting helps the management to put down in figures what is necessary for a satisfactory performance. Budgeting helps the management to plan for the most economical use of labor, material and capital. Budgeting tends to remove the cloud of uncertainty that exists in many organizations, especially among lower levels of management, relative to basic policies and objectives. Budgeting promotes an understanding among members of management of their co-workers' problems. Budgeting force management to give adequate attention to the effects of general business conditions. Budgeting aids in obtaining bank credit as banks commonly require a projection of future operations and cash flows to support