If it is not detailed then it is not comprehensive, hence ineffective (Council, 2012). If one is in the know about how much money they earn and spend, they are in a better position to make accurate short-term and long-term financial projections and decisions. The main reason why people do not keep personal budgets is ignorance. There isn’t enough emphasis put on the need or importance of a financial management. There is more emphasis on spending and advertising goods and services to the consumer.
It will help identify wasteful expenditures such as everyday take-out and buying expensive clothing, it also helps to adapt quickly as your financial situation changes, For example being in debt, and achieve your financial goals. A budget can help understand your spending habits. For example: By figuring out where your money is going, you’ll be more aware of where you need to cut back to pay off your debt and contribute to saving. Budget is important because it can help you to stop living paycheck to paycheck. By creating a personal budget, you can to see how much money you are spending throughout the month.
Have you struggled in the past to create a budget, but you unfortunately find yourself being unable to stick to it? If so, you're not alone. Many people find it difficult when it comes to compiling, planning, and sticking to a personal budget. However, you can easily and quickly set up a budget that is relatively easy to stick to if you follow a few basic steps. 1.
The key is to strike a balance between mission requirements and the resources available. A budget should include the income along with the expenses required to be successful in reaching the goals set forth for the next year. Estimating the income, expenses and potential profits, is necessary to determine if funds will be available for capital improvements or for purchasing new equipment. Starting with revenue, the estimates must be as accurate as possible. For a personal budget this may be as simple as calculating the annual income.
So, having the statement of cash flow at my disposal I will be able to know how much cash I have at hand for my daily activities such as expenses.So, We can perfectly see that the three products of accounting and bookkeeping which are income statement, balance sheet and statement of cash flow are play a crucial role in my personal finance management According to Vangie Beal, “financial software is computer software designed to help individuals manage their finances and other accounting needs. There are two types of financial software: money management software and tax software. Money management software is purposed
People are usually confused and frustrated by the amount money the use in a week without knowing that their daily impulse buying objects have piled up. Although it can be very hard to control there are many easy steps to stay away y from spending and instead saying up. Setting a goal, recording the amount you spend and even lowering your expenses can be small steps that will lead to great success in saving for the future Saving money will help someone in the future b providing the feeling of security. Usually someone will save money for a certain goal in life. Therefore the first step is test goal for the certain amount on money you need to save.
The performance of the business can be determined by looking at the budgetary numbers and helps to highlight any weaknesses and strengths in areas that are doing well. As discussed throughout, there are many other ways to achieve performance, however it is clear that the use of budget establishes the best practice from a financial perspective. When there is a budget to follow, managers are able to keep control of spend, plan and forecast effectively leading to a successful business. Therefore businesses using budgetary control methods will enable them to plan well in advance on the budgeted numbers against actual performance of the business.
1.1 Financial Planning What is Financial Planning? According to Pearson, financial planning is the need to identify shortages and surpluses. Thus the sentence very much explains all. A shortage occurs when there is excess demand and a surplus occurs when there is excess supply. Thus, is very important for Anna Lian to understand the importance of financial planning as in the future, it would allow owners to exert more control and it’s the best way to monitor assets in the business.
In order to achieve adequate finances, a business must have sound financial management practices. This includes the sharing of relevant, reliable financial information to business decision makers as they plan where funds should be spent (Ugone, 2010). When performed adequately, financial management activities support the core of the business itself by ensuring cash is adequately managed allowing all stakeholders to
First point of the importance of bookkeeping and accounting is better financial analysis and management. Martins (2008) suggest that, in a business the most importance thing is cash flow management this is due to if you delay the invoice, no follow-ups on customer payments and falling out on supplier’s list of customers will eventually crash you down. For prevent this situation, bookkeeping can help systematic it up from up-to-date follow-ups, invoicing and on-time payment for suppliers. Next, getting help and provide information when do a decision making. An accurate book of accounts will help you see where your business is and where it is going in the next several years (Importance of bookkeeping, 2010).