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23 September 2008
Clean Wallets Attract Money

Budgets are a very important and useful tool for businesses and individuals.

A Budget is a list of planned expenses and income. To succeed we first need to plan to succeed. A budget is a planning tool used to project and predict financial outcomes. Depending on its intended use a budget can be prepared annually, monthly or even weekly and daily.

A budget does not need to be fixed. It can be varied if circumstances change.

To prepare a budget make a list of anticipated expenses and income. It may sometimes be useful to do more than one budget based on different scenarios or courses of action. This applies to businesses and individuals. Budgets are a very useful tools when compared with actual results.

There are a few simple steps you can follow to create and use a budget:-

1. Decide what time period you are going to use as a basis for your budget. i.e. weekly, monthly or annually
2. look at what your income and expenses have been historically or now tracking your current income and expenses in a spreadsheet or on a piece of paper
3. On paper or in a spreadsheet list all of your income for the period selected. If it is a personal budget it would normally correspond with your pay period.
4. Now list all of your expenses, this may be able to do this by going through bank and credit card statements. Be sure to itemise all expenses on your budget, even entertainment expenses
5. Deduct your expenses away from your income and then analise the result.
6. Keep this budget as your original. You can now start to vary some of the line items in the budget where you can. You will see the different results that you can achieve. Compare these to the original budget.
7. Ensure that you have a tidy, accurate and a safe filing system for your records
8. Compare on a regular basis the actual result to the planned or budgeted result. From this you can see where you have been successful or unsuccessful. It also enables you to make changes to your future budgets.

Having accurate and tidy financial records enables you to make informed educated financial decisions. With out having the right tools or records to make decisions, how can they be the right ones?