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Man using calculator and calculate bills in home office.
When you are planning to save money, you will have to account for all of the transactions and circumstances that currently concern your life. Learning how to save and manage your money at a young age will equip you with the skills to budget your money at any age. When you are young, there aren’t any strings attached, which gives you the liberty to experiment and come up with a plan to budget for your expenses. 

Making smart money moves will ensure that your financial health stays in balance and you have enough set aside for unforeseen situations. 


Budgeting your Money at any Age – The 20’s

The 20’s is a transitional period for students, as they are moving on into their salaried life. For 7 out of 10 students, the average college debt amounted to $30,000 in 2017. Paying off this debt will most likely take years and a highly robust budget management. While budgeting, you must ensure to account for the loans and put aside enough money to pay them off as early as possible. Budgeting for your rent and other living expenses, along with the debt, takes serious effort and money management skills.

Cut back on Non-Essentials

Budgeting your money at any age requires you to make a realistic budget which takes into account even the smallest of expenses. Write everything down in a journal or use a mobile application to keep track of your daily expenditures. Before you can actually start creating a budget, you will need sufficient data from your daily expenditures. Once you have data to explain your spending behaviors, it will be easier for you to set limits on some of the items that are related to entertainment, clothing and other luxury items. These are counted as non-essentials and, once you are accustomed to living without them, you will not even feel the difference, however, it will significantly cut down on your costs.

A 50/30/20 rule is often a good way to manage your expenses. 50% of the money should go to essentials, 30% can be allocated to your wants, while the remaining can be put aside as savings to pay off debt or any other purposes.

Get a Savings Account

Planning to get your own car or a house may require you to save a lot more than 20% of your income and may also require getting a savings account. Forget about the money you put aside into this account and only resort to it according to the plan. Find a savings account that offers a higher interest rate.

Budgeting your Money at any Age – The 30’s

Ideally, once you are in your 30’s, you will have adopted healthy budgeting habits and there will be no more issues related to late payments, unnecessary credit card usage and keeping track of your expenses. This is a career transition phase and there is a high probability that you could get married and have a family. If so, managing your finances becomes even more significant.

Open a Retirement Account

Amidst all the money management paradigm, you must start making contributions to your retirement account. The IRS retirement account is a great option in the case that you do not have an employer-sponsored retirement account. This is one of the most critical times in budgeting your money. Setting up a retirement account at this age will ensure that you put enough into it for a better future down the road.

Emergency Fund

This is something that you should pick up in your late 20’s and carry it forward into your 30’s. You never know how things could turn out, so it is better to be prepared rather than sorry. In case you have not saved up for an emergency fund, you may end up dipping into your retirement account or maxing out your credit cards, which we assume you would clearly not find desirable.

Budgeting your Money at any Age – The 40’s

Whether you have settled into your family life or are still passionately pursuing a career, the 40’s is the best time to lean towards investing money and generating income. This will ensure that you are generating enough side income to pay for luxury goods and fulfill your desires. Making smart investments is key and you should never put all your eggs in one basket.

Generate Alternate Incomes

Even if you are happy with your career advancements and saving enough money for bad times, we suggest that you invest your money into stocks, real estate, trading or any field that is related to your expertise. It will allow for you to maintain a healthy family life while catering to all of your additional expenses. Both your short and long-term goals can be achieved quite early, given that you make smart investment decisions. The best strategy is to diversify your investment portfolio to minimize the risk and avail all of the benefits of budgeting your money.

Revise the Budget

Your saving and spending goals need to be revised amidst growing expenses as you may have a family to look after now as well as life insurance, medical bills and paying off tuition fees.  This can be an arduous task if you fail to make necessary budget amendments.

Budgeting your Money at any Age – The 50’s and Retirement

Now that, hopefully, all debts are paid off and there are no more tuition bills remaining, you can shift your focus towards retirement. Get a hold of your finances and plan exactly for how many more years you want to work and get into some real investments in the areas you have benefited the most from your recent experiences.

Reconsider your Choices

This is the time when you should really start doing what you wanted throughout your life but have been unable to do. For example, if you wanted to travel and couldn’t, you could plan a trip. Make some adjustments in your lifestyle to account for the travel expenses, as we expect you to be a pro at budgeting your money by this age.

Consult a Retirement Planner

Though you have learned to manage your own money by now, it can still prove beneficial to have a second opinion. Consult with a retirement professional and discuss your investment decisions and options. You might be missing out on something which could dramatically increase the return on your investments.

Following the above mentioned budgeting tips will ensure that you retire with grace and freedom.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

 

 

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There’s no denying the fact that creating a budget helps you get a better grasp on money management. Most find it extremely difficult to create a budget and those who are successful in making one, find it even harder to stick with it. Why? Perhaps, they fail to maintain their long-term budgeting and saving ambitions, which eventually results in yielding no significant outcomes. However, getting in control of your finances is extremely important no matter whether you are on the path to creating a budgeting plan for your household or business purposes.

Set Long-Term Financial Goals

In order to reach your long-term financial goals, you need to create a budget plan as it is regarded as one of the most critical financial tools that helps you meet your intended goals. Whether you are creating a budget for your household or business, you must reevaluate your priorities and gather all of your financial data to have a clear picture of your financial condition. Once you know your cash flow status, only then can you come up with a plan for ideal budgeting. According to studies, 70% of Americans fail to stick with their monthly budgets, which bears testimony to the fact that sticking with the budget is extremely tough.

Set Saving Goals

According to the 80-20 rule, you need to save and credit 20% of your income to your savings account. Saving money helps you meet uncertainties and financial emergencies, which allows you to be financially secure and stable. Building an emergency fund for unexpected times should be a top priority because emergencies can occur anytime. Although, saving targets can be based on an individual’s preferences; some set their saving targets up to 40% of the total amount they earn in a month.

Know Your Net Income

To create a budget, you need to know the exact amount of money that you have coming in. Why? Because you can only make a workable budget once you know the total income you have to work with each month. This includes everything, including full-time paychecks, part-time jobs, social security checks, child support, etc.

Track Your Spending

You need to track and monitor your monthly spending because this will reveal a lot about your spending habits. It is ideal to make a list of expenses, both fixed and variable, if you expect to create a budget that works for you. Fixed expenses include monthly bills such as rent or mortgage, car payments, and utilities. It is hard to cut back on these expenses as you need to provide them no matter what. Variable expenses include entertainment, groceries, shopping, etc. Cutting back on these items is relatively easier because of their nature. Creating a budget doesn’t have to be that hard if you know the significance of your expenses as they occur.

Adjust Your Spending Habits

Documenting your income and expenses helps you in maintaining a record of transactions that will further help you in creating a budget for the month. People who find it hard to stick with their budget are those who can’t control their reckless spending habits. With increasing e-commerce platforms, it has become tougher to restrict ourselves from impulsively buying products that look visually appealing and attractive. Since humans have the tendency to fall prey to our desires, it can be quite challenging to cut back on our income and save money for hard times. However, if we expect to create a budget that works for us, we need to adjust our spending habits by keeping track of our income and expenses.

Keep Checking In

To stay on top of your expenses, you need to continually keep checking back in. Fortunately, there are budgeting tools and apps out there to help set your priorities straight and have a budget that is easier than ever to create and follow. Besides creating a budget, you need to keep checking in and reevaluating your budget continuously.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

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Just like all other generations, millennials have to face a unique set of challenges in their transitional journey into adulthood. Entering into “the real world” has been tough for the current young generation because of uncertain economic times as well as the burden of student loans. Money management has to be a top priority if they want to succeed through these tricky times.

Budgeting is vital for everyone. However, it is crucial for individuals who are in their 20’s and 30’s because it will eventually decide the quality of life later on. Keeping track of your financials ensures that you do not make imprudent money decisions and that you practice healthy spending habits at an early age.

Budgeting Tips for Millennials

Look at the Bigger Picture

Before you get into any budgeting details, you must draw an exclusive overview of all of your income streams and how you are currently managing them. If you believe that you are not earning enough money to make ends meet, it’s probably time to either look for another job or cut your expenses. One way to move up in your current job is by giving 100% to even the most insignificant tasks. This might incline your boss to notice your sense of responsibility which could lead to a raise or promotion.

Having a clear picture of your savings and investment options is also a part of budgeting. Millennials have to be ready for times that are coming up ahead. Invest in a retirement account as soon as possible because this will allow you to start contributing to it from the very beginning. There should also be some kind of emergency fund, which can be used in case of unforeseen circumstances. Basically, you need to look at the bigger picture when making your budget rather than focusing on short-term goals.

Form a Budget

The ultimate purpose of a budget is to allow you to live comfortably within your means and save enough money for your future. The very basic ingredient of a budget is data. All of your income, expenses, debts, and any other financial affiliations will be presented in the form of numbers or data. Add up all income from whatever sources there are in order to begin your budget.

Once you have accounted for income, try detailing your expenses along with the category they belong to such as living expenses, bills, loan payments, rent, and others. Millennials often tend to let go of small expenses that they consider to be unimportant. However, these small amounts tend to grow significantly with time, therefore, they must be catered to from the start. 

Subtract the income from expenses to have a clear overview of what you have to work with each month. The next plan of action can then be decided based on the data in front of you. It all depends on your what you are planning to spend and then saving the remaining balance, which will make all the difference in the end.

Refine the Budgeting Strategy

Millennials quite often have to deal with unforeseeable situations because of the fast-paced world we live in. They come across various instances that may require you to spend outside of your budget. To manage such unforeseen circumstances, it is recommended that you should keep enough space in your allocated budget. Allocate some amount to expenses that may occur without any prior warning.

This is also the time to refine your budgeting strategy as most of the basic elements are in place now. As portrayed in the above scenario, everything might not turn out to be how we planned, therefore, a refined strategy basically caters to all anomalies that can affect your budget.

Seek Help from Technology

As we see, the advanced solution of almost every problem is technology. Millennials can similarly seek technological solutions for their budgeting needs. There are apps that can help you:

  • Track cash flows
  • Optimize investments
  • Set up a detailed budget
  • Receive alerts
  • Provide updated balance details

Being able to keep track of all these activities in one place is an extremely useful way to manage your budgeting needs and they must be implemented by every millennial in order to stay afloat in today’s society.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

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The powerful energy that you get as soon as your paycheck clears is indeed one of the most amazing feelings after a  month of putting in your hard work. However, soon, the money in your bank account gets wings and flies away, leaving you dull again. With a simple act, you can monitor your spending patterns and save a lot from the same amount of earnings. Previously, budgeting was a dull and tiring process where you had to manually add all of those excessive lists of expenses that leave you confused at the month’s end. 

Budgeting apps for personal finances is a savior in today’s era where you can manage all of your expenses from your smartphone. We all carry smartphones now as they have the power to keep us connected with the whole world. Managing your expenses, expected incomes, and savings was never easy before the evolution of smartphones. Budgeting is actually not as hard as it sounds. All you need to do is adopt a modern version of bookkeeping. The recording of your spending will show you a pattern of your expenditures and eventually you can save more money from the same amount that you receive each month. Below are what we believe to be 2018’s best budgeting apps.

Mint

Pros

Mint is the most popular budgeting app that provides its customer with plenty of features. The app is designed by Intuit. Its popular features are:
  1. Keeps bills and money all in one place
  2. Gives alerts and reminders for bills
  3. Creates budgets
  4. Helps in meeting your savings goals
  5. Prepares reports and charts on a weekly basis
  6. Knows your credit score
  7. Manages your portfolio and finances together
  8. Secure app with multi-factor authorization

Cons

  1. Issues in updating that have been reported by customers
  2. Issues with linking with a few bank accounts
  3. All features are available on the web version only

Platform for Mint

IOS
Android
Apple watch

Software Requirements

IOS: 10.0 or later
Android (depending on your handset)

Cost

Free with adds


You Need A Budget (YNAB)

Pros

  1. Bank Syncing
  2. Real-time access anytime from your mobile phone
  3. Freedom for debt pay down
  4. Achieves your goal by tracking them
  5. Gets proper reports and summaries
  6. Live support and personal support
  7. Easy to use
  8. Reported as the best app for getting out of debt

Cons

  1. Fewer features compared to other apps
  2. No reporting for investments

Platform for You Need A Budget

Android
IOS
Apple watch

Software Requirements

Android: 5.0 and up
IOS: 9.0 or later

Cost

$6.99 per month


Wally

Pros

  1. Reported as the best app for tracking expenses
  2. Unprecedented insights
  3. Location-based speed
  4. Smart notifications
  5. No ads
  6. Recurring income and expenses
  7. Store photos of receipts
  8. Exports data in CSV form

Cons

  1. Less user-friendly
  2. Limited review section
  3. Does not sync with bank accounts

Platform for Wally

Android
IOS

Software Requirements

Android: 4.0 and up
IOS: 9.0

Cost

Free


Acorns

Pros

  1. Maintains portfolio
  2. Invest easily in managing your budget
  3. Watch your progress
  4. Withdraw anytime
  5. Best app for painless saving

Cons

  1. Commissions are deducted from accounts less than $5000
  2. Low investment opportunities

Platform for Acorns

Android
IOS
Apple watch

Software Requirements

Android: Varies with device
IOS 10.0 or later

Cost

$1 per month for an account managing less than $5,000


Level Money

Pros

  1. Simple set up
  2. Syncs with multiple bank accounts
  3. Syncs with multiple credit cards
  4. Money insight summaries and reports

Cons

  1. Not ideal for variable income
  2. Doesn’t provide advice

Platform for Level Money

Android
IOS

Cost

Free of cost but not for fluctuating income



Check out America's Best Bookkeepers

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Portrait of smiling family with grandparents standing against tree
There is no specific age to fall into financial folly. With every new monetary milestone, financial goal and responsibility comes a whole new perspective of how you manage your finances or mess it all up. If you find yourself guilty of a spoiled personal financial viewpoint, you are not alone in this matter. In fact, every generation reveals many significant mishaps, poor choices, and financial mistakes that its members often make. The smartest way to avoid making or repeating such blunders is to recognize and understand such issues before its too late. Keeping that in mind, here are five of the most common money mistakes that each generation seems to make.

1. Individuals in Their 20’s – Must Overcome the Fear of Investment

Young individuals need to invest significantly into growth stocks. Though they accompany some risk, they offer the immense potential for greater returns over time. Sadly, too many people in their 20’s are too afraid to take risks or are extreme risk-haters that avoid investing. Rather, their portfolios are inclining heavily on their assets and very little on stocks.

According to experts, one of the financial mistakes of risk aversion stems from financial illiteracy and a terrible generational fear of failure. In addition, they believe today’s young generation is more skittish as a result of unpredictable events they have witnessed in their lifetime such as the financial meltdown and the 9-11 attack. To date, mutual funds are one of the most practical ways to ease the angst about investments as they begin with riskier growth assets and, over time, slowly transition to more conservative holdings.

2. Individuals in Their 30’s – Too Much Expectation and Information

Today, more and more Americans are waiting until their 30’s to begin a family or purchase a house, marking this age as a chaotic time. Although these young adults most often think that they must be living the way their elders did, it takes considerable time to build and maintain that level of financial status and comfort. Attempting to live that ideal lifestyle by shrinking credit card debt and purchasing a big house will eventually make it more difficult to fulfill their long-term financial goals.  

Making poor investments is one of the most common financial mistakes that today’s 30’s generation makes due to lack of financial knowledge of the several potential opportunities and available options. Young investors lacking the willingness or time to educate themselves might consider approaching financial professionals and bookkeeping experts for smart decision making.

3. Individuals in Their 40’s – Baring Family Expenses All Alone

The 40’s is the midlife period that brings the toughest expenses of all – raising kids, buying homes, maintaining a family, baring their children’s education expenses and possibly even caring for an aging parent. Such burdens have to be managed proactively to prevent both short and long-term difficulties. Baring all of the financial burden alone is one of the biggest financial mistakes that the 40’s generation makes today.  Rather, they must encourage sharing the financial burden among other family members and encourage their children to be financially independent by working a part-time job or applying for scholarships. Also, they should start living within their means and build an emergency fund as soon as possible. 

4. Individuals in Their 50’s – Trying To Catch Up

Too many people reach their fifties and realize that they have nothing saved for their retirement. Such financial mistakes can be avoided if individuals start saving for their retirement far earlier in life. With the hope of building a business to support their retirement years, an increasing number of Baby Boomers in their 50’s are turning towards entrepreneurship. However, it can render a risky proposition with both immensely significant upsides and downsides.

Although retirement feels hard and uncomfortable when one has to prioritize saving, work a side job for necessary income, and/or downsize a home and lifestyle, it defeats the fear of an under-funded retirement.

5. Individuals in Their 60’s and Beyond – Fail to Ask For Help

According to financial experts, today’s older Americans are comparatively less mature than elderly citizens of older generations. However, age inescapably lowers the brain’s analytic abilities thus making it hard to avoid financial mistakes. Hence, it is imperative for every person to have people they can rely on for financial assistance and decision making matters in their late years. These people could be your family members, friends, financial advisers or a mix of all of these.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Chubby puzzled man looking at credit cards in hands looking desperate with spending money.
A budget is an approximation of revenue and expenses over a quantified future period of time; it is accumulated and re-evaluated on a periodic basis. Budgets can be prepared for an individual, a family, a group of people, a business, a government, a country, a multinational organization or just about anything else that makes and spends money. Among businesses and organizations, a budget is an internal instrument used by administration and is often not essential for reporting by external parties.

Following a budget or spending plan will also keep you out of debt or aid you to work your way out of debt if you are currently in debt. Spending less than we make is usually quoted as the most important personal finance objective. It helps us to save for emergencies and stash cash away for retirement. It’s the principal practice that facilitates us to attain some level of financial freedom.Constructing a budget with a template can help you feel more in control of your finances.

Common Excuses for not having a Personal Budget

Individuals and families have finances, too, of course – or they should. Generating and using a budget is not just for those who need to meticulously monitor their cash flows from month to month because “money is tight”; it’s a valued tool for all demographics. Even though budgeting is a wonderful tool for managing your finances, many people still think it’s not for them. Below is a list of budget mythologies – the specious logic that halts people from keeping track of their investments and allotting money in the best way.

1. I don’t need to Budget: Having a grip on your monthly salary and expenditures allows you to make sure your hard-earned money is being put to its highest and finest purpose. For those individuals who enjoy a salary that covers all bills with money left over, it can help maximize savings and investments.

2. I’m not good at Mathematics: Thanks to budgeting/costing software, you don’t have to be; you simply have to be able to follow guidelines.

3. My job is Safe: No one’s employment is truly secure. If you work for a corporation, being laid off due to downsizing or a takeover is always a possibility. If you work for a small business, it could die with its titleholder, be bought out, or just fold. You should always be ready for a job loss by having at least three months’ worth of living expenditures in the bank.

4.  And if it’s not, Unemployment Insurance will save me: Unemployment compensation is not a definite thing. Let’s assume if a bad condition at work leaves you with no choice but to resign from your job. Unless you can prove constructive discharge (that is, you were virtually forced to resign), your exit will be measured voluntary, making you ineligible for unemployment insurance.

5. I don’t want anything big: If you don’t have any main savings goals, it’s tough to tap up the motivation to stack away extra money each month. Though, your condition and your attitudes are possible to change over time.

6. I’m Debt-Free: Great for you! But it won’t pay your bills in an emergency.

7. I always get a Raise or Tax Repayment: It’s never a good notion to count on changeable sources of income. This may be the year your business may not have enough money to give you a raise or as much of an elevation as you’d hoped for, even if you’ve earned it. The same is true of bonus money. Tax refunds are more trustworthy, but this also depends in part on how good you are at computing your personal tax liability.

8. I just don’t have the right regimen: If you’re still not swayed that budgeting is for you, here’s an approach to safeguard yourself from your own spending practices. Set up an automatic transfer from your checking account to a savings account, programmed to occur right after you get paid each time.

Conclusion:

Formulating a budget doesn’t have to be difficult. A budget can secure your future financial status and lead you to financial freedom.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Notebook with dollars, pen and calculator on wooden desk. Financial concept
A successful business is an amalgam of several departments working under its flagship in a harmonious way. The most important of all is in the department of finance, which is the backbone of all other departments. The finance department is responsible for providing fiscal value to all other departments to make their management possible. In order to make the operations of a business coincide with it’s strategic plan, effective budgeting is required. When planning a budget, efficient techniques are adopted in order to make it an effective one. Each organization or business establishment differ in nature, therefore every organization is advised to adopt budgeting strategies depending upon its characteristics to make its operations effective and feasible. The following are the effective budgeting techniques which can be used in order to inoculate efficiency into the operations of an organization.  

Start from Scratch

Budgeting plays a vital role in operating a system of an organization efficiently. In order to make the task feasible, it is advised to start from the scratch. Starting from scratch means training yourself with all of the terminologies and equipment required to prepare a smart budget. Therefore, entrepreneurs are advised to take training courses and obtain certifications to acquire sufficient knowledge regarding budgeting.

Preview your Already Existing Budgeting Plans

In order to inoculate efficiency into a business, it is necessary to review your existing budgeting plans to avoid errors and insufficiency. After being trained for appropriate budgeting, all business owners and entrepreneurs are advised to review their already designed business plans in order to generate error free results. Bookkeeping is the most trusted methodology used to test the credibility of a budgeting plan as it provides a large portrait of all activities performed on a single platform. 

· Go for Long-Term Planning

Every organization started with certain intrinsic properties which are different from the other. Therefore, budgeting techniques followed are planned according to the requirements and nature of a business.  Bookkeeping is the only concept which is applicable to every business as it is considered responsible for providing a clear notion of every task performed or to be performed in a company. It supports the stance of designing an effective budget for a company which also makes long-term planning of a company’s operations possible. Entrepreneurs are advised to go for long-term planning in order to avoid any chaotic situations in future; for instance a specific budget section must be allotted for the time of recession(if and when it comes).

· Look to the Future

Financial management is a broad cloud; it involves various genres such as revenues, expenses, cash models, cash inflows etc. Therefore, effective budgeting is the one which caters all of these concepts under a single flagship in order to run a business successfully. Financial experts are advised to plan a budget (with the help of bookkeeping) looking at the upcoming planned events of an organization so that efficiency of a business establishment can be increased.

Final Note

Efficiency in a business is achieved when it produces maximum goods and services at minimum possible cost. In order to inoculate efficiency into a business, effective budgeting is the best strategy. It responsibly allocates the optimal number of shares and monetary worth to every department so that its operations can be accomplished successfully.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Frustrated and overworked businessman burying his head uner a laptop computer asking for help
A budget is a critical part of any business, whether small or large. In a budget, one plans how much will be spent on each business operation and when to spend or save. For new small business owners, budgeting is a challenge. It must be prepared correctly.

Here are a few common mistakes observed in budgets of small and new businesses and tips to avoid them for the speedy growth of a business.

Mistake: 1- Lack of a business plan and strategy:

New small business owners often don’t have past experience of budgeting and running a business. They make the budget without a strategy and business plan. Small and long-term financial plans are the crucial part of a budget, but new small business owners are eager to jump into their start-up without a detailed business plan and goals.

How to avoid?

Take advice from an experienced entrepreneur or a seasoned businessperson. Detailed homework should be done on budgeting. Goals and long and short-term financial plans should be defined. Insert all of these plans into the budget. Once started, this business plan should be reviewed periodically. By a review, you can analyze the validity of strategy and can make necessary adjustments if needed.

Mistake:2  Underpricing:

Once a new small business owner enters the market, they find it suitable to sell their product or service at a price less than that of the competitors. This strategy is adopted to attract customers. But in fact, you are losing your money. Less is the profit margin, more is the loss. To compensate this loss, sometimes they lower the operating expenses by producing a low quality product. The customer is not likely to purchase it. Again, you are in loss.

How to avoid it?

To compete in the market,  don’t reduce the sale price because your revenue will be less than the expenses. Neither lower the quality. Just sell the quality product at a suitable price and let the customer know the value of your product. The customer themselves make the comparison of the products and decide where to buy from.

Mistake: 3- Over spending:

The initial few years of startups are very crucial for business success. The mistake often seen is that new small business owners start spending excessively as soon as revenues start receiving. The most common budgeting mistake is that they overspend on advertising. A common assumption about advertising is that it will immediately enhance sales. In fact, at least a quarter is needed to see the impact of advertising on sales. Overestimation of revenue leads to the budget deficit.

How to avoid?

In the initial stage of small business, each penny should be saved and spent with great care. Advertising costs should be logically budgeted without considering an immediate return of the revenue.  Overspending affects budgeting a lot. Keep the operating costs low and capital should be increased.

Mistake: 4- Underestimating uncle SAM

Every business has to pay a heavy amount to the Government in the form of taxes. If you underestimate the amount of taxes you are liable to pay, it will badly affect the budget.

How to avoid?

To avoid underestimation of taxes, don’t consider the end of the day balance. This balance does not show the exact value of employees’ withholdings and revenues. Make a proper estimation of taxes.

Mistake 5: Lack of management

A small business owner has a busy schedule. They have to do many tasks alone. They may fail to manage and organize their business cycle at an optimum level. This disorganization can lead to extra expenses and less profit margin.

How to avoid?

Use software for managing the business properly. This software is used for bookkeeping, accounting, and generating payroll. Your time is saved which can be used to grow the business.

Conclusion:

Budgeting mistakes can be avoided by following the above-mentioned plans. A proper budget is key to business success. 


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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

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Effective budgeting refers to the optimum allocation of resources in order to operate several functions of an office in a well-organized manner, whereas bookkeeping refers to the record keeping of all transactions which take place in a workplace. As illustrated by the above mentioned definitions, the two  can be related in a simultaneous order. Budgeting requires the allocation of resources, while bookkeeping requires the record keeping of the transactions which take place from the allocation of funds-from the scratch to the finishing line. Both terms belong to the genre of accounting, where auditing comes under the perspective of bookkeeping. Effective budgeting leads to the promotion of an efficient business which conclusively provides maximum returns at minimum cost. Bookkeeping helps in carrying out effective budgeting tasks and aids in identifying weaknesses, strengths, limitations and savings of a business. Following are certain wonders of effective budgeting:

 

  • Utmost Expenses of a Business can be Planned through Effective Budgeting:

As stated by James LeMay-the director of Daigle and Associates with an accounting firm in Boston,” This helps you to be honest about what is coming so you can plan for it beforehand”. Budgeting plays a significant role while planning the transactions which are most likely going to take place in an enterprise in order to plan about the expenses of the company in a systematic manner. However, the technique is beneficial as it allows the allotment of resources while keeping the budget in mind as well as the estimated expenses.

  • Enlists Accurate Documentation of the Deposits made in a Business:

The technique can be applied through various accounting softwares which can be easily downloaded through online accounting websites present such as GnuCash or QuickBooks. These softwares help accountants in recording all transactions easily. Keep in mind that wrong entries can lead to incorrect results ultimately affecting the whole scenario of accounts in a business. This allows the keeping of accurate records of a business to avoid any inaccuracy in budgeting performed.

  • Ensures the Welfare of an Office:

Optimal budgeting and proper allocation of all resources and funds available in a particular business ensures the well-being of a work place so that management can say that their resources are being used for the proper welfare of their own business. Moreover, budgeting helps in reviewing a business’ profits where it can be explored through the resources left out of the ones allotted for the running of a business. These resources usually come from the profits earned by a business association.

  • Helps in Increasing Efficiency of Employees:

A certain amount of budget available can be appointed for the employees with high productivity.  This drives them to accomplish a company’s targets on time. A highly qualified and experienced team of accountants must be appointed to perform budgeting tasks in order to enhance the effective working of a business corporation. It’s employees must be treated with great care in terms of high bonuses for those that have proven their work.

Final Note

With the advancement of technology since the industrial revolution, people have moved towards the making of tools as well as softwares in order to make their lives easier in all perspectives. The field of Accounting & Finance has also progressed in an optimistic manner in order to make businesses run smoothly as well as efficiently. Budgeting and Bookkeeping are two important terminologies which can be used in order to maintain the order of balance in a company’s accounting department. The two terms are interrelated and useful in the cloud of accounting & finance.  Budgeting proves to be a wonderful aid in promotion of a smooth and successful business.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

Businespeople at panel discussion in board room

A good business plan and a budget are critical for every business and organization hence a structured and organized strategic plan should be made before budgeting.

What is Strategic Planning?

A strategic plan includes strategies of an organization for potential actions and operations, targets, guidelines, and sources needed. Its duration is 3 to 5 years or more. Current and expected market environment is also included. These marketing forecasts help in clearing a view about demand and supply assessment, market inflation and financial needs.

Strategic Planning and Tactical Planning:

Tactical planning includes determining exact objectives and resources that will be used to accomplish strategic tactics. Tactical plans are of two types:

  1. Long-term, for example, in some tactical plans, corporate policy statements deal with cyclic situations.  Short-term (1 to 18 months), are made to deal with specific situations or a particular phase. They are usually for single use. An example of a tactical plan is the annual budget which is used for a sole plan. A budget is the resource used to achieve goals of strategic and tactical planning.
  1. Quarterly and monthly plans are incorporated into the annual budget to formulate it more successful.

 The budgeting process is not strictly associated with strategic and tactical planning. According to the former CEO of General Electric, Jack Welsh, the most ineffective management practice of a company is the process of budgeting.  The disengage among the budget and the strategic planning is the most significant reason for an ineffective budget.

Here are several steps for a better connection between budgets and strategic planning recommended by Carlson:

  1. Executive-level must participate in the initial step of the budgeting process:

The individuals who are involved in strategic and tactic planning must be involved in a budgeting cycle to ensure formulation of an effective budget. There should be a clear connection between strategy and budget. Most strategic goals are achieved through the budget. The connection between strategic goals and the role of every employee should also be assessed. How the role of every employee can be helpful in accomplishing goals should be discussed at all levels.

  1. The budget cycle includes a long-term plan:

 The Annual budget is for one year only and outcomes of the business plan are not delivered within this short period.  A yearly plan should be a part of a business plan. In this way, the tactical planning of the budget aligns with strategic planning of the company and this connection should be validated time to time. Consequently, the level of goal achievement can be determined and any adjustments could be made if needed.

  1. Measurement of KPI success:

KPIs (key performance indicators) of achievement should be formulated.  They should be regularly calculated and discussed with all to determine level of goal achievement and any adjustments could be made if needed.

Validation of targets:

The percentage of successes should be determined according to the economic setting and better decisions should be made according to this information.

Review of strategic and tactical planning:

Strategic and tactical planning should be reviewed at least quarterly to determine their validity as a measurement of success. Organizations sometimes set idealistic expectations based on better past performance but a changed market environment makes their strategy flop. Periodic assessment enables organizations to make necessary changes to meet the targets successfully and within the stipulated time.

Key budgeting and planning points are:

  • There should be direct relation between budgeting and planning
  • All strategic plans are covered in the budget
  • How market affects budget planning

CONCLUSION

All of these elements are the root for creating the alignment of strategic and tactic planning to the budgeting process. The strategy is the planning to achieve goals while the budget is utilized to achieve this goal. For achieving goals, strategy and budget should be a true interlink.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.