• Describe the relationship between financial planning and budgeting.

• Understand how to set and achieve long-and short-term financial goals.

• Establish the structural and mechanical aspects appropriate for your personal budget.

• Create and implement a budget, cash flow statement, and balance sheet.

IF YOU FAIL TO PLAN, YOU PLAN TO FAIL!

To succeed in money matters requires implementation of financial

plans.

• Financial planning

• Budgeting

• Values

• Goals

1. Personal Financial Records2. Personal Financial Statements3. Budget (Spending Plan)

PAST

Income and Expense

Statement (Cash Flow Statement)

PRESENT

Balance Sheet

FUTURE

Budget

Set Goals

Organize

Decide

Implement

Control

Evaluate

Achieve success in financial goals

Monitor, review, revise

after each period.

• 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

• Select recordkeeping format

• Use cash or accrual basis

• Select budget classifications

• Select time periods

• Inflation and other economic factors

• Realistic budget estimates

• Reconciling initial estimates

• Recording actual income/expenditures

• Managing with a cash-flow calendar

• Utilizing a revolving savings fund

• Calculating time-period totals

• Stay on target

• Check progress

• Be alert to problems or errors

REASONS FOR BUDGET CONTROLS:

Only 58% of young adults pay their bills on time.

National Foundation for Credit Counseling

• Use a checking account

• Employ a credit control sheet

• Check accuracy

• Monitor unexpended balances

BUDGET CONTROL MEASURES:

• Justify exceptions

• Use the envelope system

• Employ subordinate budget

BUDGET CONTROL MEASURES:

• Compare estimated and actual amounts

• Decide how to handle balances

• Assess progress toward goals

Take Home Pay-Net Pay

Discretionary Income-Less than 5% for people under 25

Fixed Expenses

Variable Expenses

Surplus

Deficit

Budget Variance

Emergency Fund