Want to make some savings but don’t see it happening? Well, you are not the only one, most people that you see around you experience similar financial issues and the reason why I say it is because I had been facing the same problem since the time I started working.
I know it is quite upsetting to see no savings after having slogged for years or months in my case. And when it starts to get frustrating, you start cribbing about your job and salary. Let me ask you a question; is it your job and salary or your extravagant life that keeps you from making some savings?
The Importance of Planning a Personal Budget
Honestly analyze your situation and you will discover that it’s not your income but your poorly managed finances that does not allow you to save. Of course, there can be other reasons as well but it is usually the case. But whatever the case may be, if you plan your budget realistically you are most likely to see a significant cut down in your expenditures.
Planning a proper budget is the key to make money. Be it big organizations or working individuals, both need to have a budget that they need to follow in order to see their money grow. Once you have worked on a proper financial plan, you know you are well on your way to make some significant savings and see your money growing in your bank account.
Budgeting Steps That Save You Money
Have you ever realized that in a day we do a lot of impulsive expenditures? These impulsive expenditures or unnecessary spending can be avoided. But for that, you need to know where your money goes. In order to do that and then make a personal budget you need to keep a track of the followings:
1. Keep a check on your expenditures: this is the most inexpensive way to cut down your expenditure. Use a notebook and keep marking your spending or list them on MS Excel sheet and then analyze your expenditures, figure out where can you cut down and work on them accordingly.
2. Figure out your necessary expenditures: before you start spending your money, make a budget where you need to make sure that all your necessities are taken care of and how much money you are left with. From the left over money you again need to find out how much you need to save and with the rest you can enjoy.
3. Recurring expenditures: these are the expenditures that you need to make every month like various insurance payments, childcare, school launches, garbage services, movies, dinners, etc. these expenditures are a must and can’t be reduced. So calculate them and find out how much you need to spend approximately.
4. Variable expenses: these expenditures are not on a monthly basis like Christmas, birthdays, father’s day, mother’s day, etc.
5. Loans: education loans, credit card debts etc.
Now in order to make a personal budget, all your expenditures need to be on a monthly basis. When you add up all your expenditures and then divide them by 12, what you get is what your average monthly expenditure is supposed to be.
My Personal Budgeting Experience
When I was going crazy with my expenditures and I didn’t know what to do, my friend told me to follow what I just discussed in the preceding paragraphs and believe me, I was pleasantly surprised to see the outcome. I still have the same job with the same salary yet it feels a lot different.
Today I have savings and fortunately, enough do not have to go through those annoying financial crunches at the end of the month, which makes me a much more confident and an independent individual.
Merry Maids Franchise is part of the Servicemaster family of franchises and is supported by the servicemaster brand, which has been around since 1947.
What Are Budgets and Forecasts?
They are predictions of future income and expenses and cash flow. They also predict future performance with financial forecasts and projections and with financial models.
Why Budget and Forecast?
Budgets and forecasts provide a feasibility analysis. They can help develop a business model, review your key assumptions, and identify resource and capital needs. Budgets and forecasts can be used to find funding. They demonstrate the potential of your business to investors and lenders. Budgets and forecasts can also be used as a management tool. They can help you establish milestones and require accountability for accomplishing the milestones. They can help identify risks and show benchmarks. This will help the small business owner make the necessary adjustments to avoid the risks, to reach the milestones, and to measure up to benchmarks.
Why Are Forecast Important?
A forecast can establish measurements to guide management, to facilitate planning, and to facilitate goal-setting.
What Areas Do You Need to Forecast?
It is critical that you forecast your start-up costs so that you know how much it will cost to open your doors. You need to prepare estimated start-up financial statements and estimated short and long-term revenue forecasts. As part of your forecasts, you will review key concepts and issues that will make a difference in your company’s survival. You also need to forecast the resources you will need and set up a schedule for using and replenishing your resources.
Do Investors Want to See Forecasts?
Yes, your forecasts will show investors that you know your business, that you are likely to succeed, and that you will make wise use of their money. You must have at least a five-year forecast that shows significant profit by year five, significant net income by year two, and that investors will earn approximately 10% return on their investment.
Do Lenders Want to See Forecasts?
Yes, your forecasts will show lenders that you know your business and the you will be able to repay the loan. Be sure you forecast for the entire period of the loan and use conservative financial ratios, because the lenders will. Also, you will need to collateralize and personally guarantee the loan.
The investors and lenders will want to see forecasts of your profit and loss and revenue. They will also want to see what drives income in your industry; for example, sales, distribution, advertising, internet search engines, referrals, location, price, or coupons or other discounts. You also must forecast the revenue cycle for your target customer. How much time will you need to start production, and how quickly will your product or service be accepted in the market?
What Other Forecasts Are Needed?
Another important forecast is the total personnel required to support your desired revenue. If your revenues result from sales, you should start with the desired revenue in year 5. From year 5 subtract 40% from each prior year. On the basis of your research, estimate the number of sales each sales person will make each year. From that you can calculate number of salespeople required.
After you make your forecasts, you should complete a sensitivity analysis by adjusting each major item estimated by 10% plus or minus. Examine the impact on revenues, profit, and cash needs. Remember that most operating expenses are roughly proportional to personnel headcount. These are your variable expenses such as salaries, benefits, employment taxes, furniture, computers, rent, supplies, utilities, training, travel, meals, training, and dues. Other non-variable expenses may or may not be proportional such as professional services, subcontractors, advertising, and trade shows.
Use your forecasts to compare yourself to others in your industry by such things as revenue per employee, revenue per salesperson, gross margin, expense categories as a percentage of revenues, financial ratios, and inventory control. It is critical that you know your industry’s benchmarks and metrics and that your business forecasts are within these benchmarks and metrics. You can find this information by researching your industry.
Should You Hire a Business Consultant to Prepare Your Forecasts and Research Your Industry?
Yes! Unless you have a very strong finance and accounting background, you cannot create financials that will be acceptable to investors and lenders. You cannot do an acceptable business plan with a spreadsheet, and it will be difficult for your to be objective in developing your business model. Also, you are the entrepreneur and your efforts are better spent building and developing your business which is what you do best.
Jo Ann Joy, CEO, Indigo Business Solutions
JoAnnJoy@IndigoBusinessSolutions.net, Phone: (602) 663-7007
The future of your business starts here.
For more information about these and other important topics and for legal consultation, please visit our website at http://IndigoBusinessSolutions.net Copyright 2006. Indigo Business Solutions is a registered trade name.
My Software Business, an online business in a box package, is a complete solution for marketers interested in selling a high demand product to online business people looking for a sales letter creating tool. It has helped me start earning an income from selling software without requiring to have the knowledge and spend the time developing my own website. This package includes all the readymade tools that I simply plug and play to start selling the Sales Letter Creator software.
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The current economic crisis has created new entrepreneurs from among those office lady workers who have been temporarily laid off as the downsizing of companies continue due to the financial crunch. If you are one of those out of a job now, consider going into the drop shipping business online and since you are fond of jewelries, the best line of business you can pursue should be in fashion jewelry. You are familiar with the language in the business and there is no reason you will not make good in this field. Just ask your techie husband to make a beautiful website for you specializing in the area of jewelry. You will not run out of women jewelry addicts who are searching regularly online the best deals they can get in this business.
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There was a time not so long ago when just about anyone could get a car financed to them. Those were the days! Then something happened that caused just about all loans to come to a screeching halt. This includes all loans but the hardest hit were home and auto loans. The credit market freeze has made it nearly impossible to find money to lend. Even people with really good credit are lucky if they can get a loan. People that are considered to be sub prime borrowers are pretty much out of luck!
Lending institutions are more likely to decline loans in this current economic state. There is a better chance of approval for those with good credit if you look at Toyota and BMW as they are still considered to be healthy lenders. If your credit is less than perfect you will certainly want to pay down some of your debt before approaching any lenders. You may also have better odds if you buy used and spend less.
Even those that would normally walk into a bank or credit union and be automatically approved are finding that most loans are being declined and if they are by chance approved then there is a lot more red tape to go through than ever before. Plus, the interest rates will likely be considerably higher too. Some with flawless credit and a decent income are paying just shy of 13% interest. These days it is all about managing risk.
Consider that before the credit market freeze, about 80% of all car financing was approved and that number has plummeted to around 25%. Those that are lending are offering less so borrowers should expect to put a sizeable down payment when financing a car. It is not uncommon in many cases for lenders to require up to 20% down. The credit market freeze has brought forth further restrictions too such as more documentation prior to lending which makes it harder for many to qualify.
The amount of time to pay off the loan has also changed. Most used car loans can not be extended farther than 72 months and 84 months for new car loans. This also holds true for those that lease vehicles as well. Even big shot car manufacturers like Chrysler have opted right out of all leasing options. Times are tough but the good news is if you are able to pay cash then you will likely get a great rock bottom price now!
But how about getting your auto loan approved in about 24 hours?