CASH FLOW MANAGEMENT & BUDGETING
Profit or loses
On the first Tuesday of every May, the Commonwealth treasurer stands up in Parliament and delivers the federal budget. This is an event of enormous importance to the nation, and the media get themselves into a frenzy before and immediately after the big night.
Your household budget doesn’t have quite the same national importance. However, from your point of view, your personal household budget is much more important than anything the Treasurer says in any given year.
Your personal budget concentrates on two things: your income and your expenditure. Obviously, you need your income to exceed your expenditure if you want to get ahead financially. But many people struggle to identify exactly what their income and expenditures are. Budgeting is a way of recording past income and expenditure and using these records to predict future income and expenditure.
There are many advantages to budgeting. The obvious one is that budgeting lets you make better financial plans. Put simply, budgeting tells you how much you can afford to spend. Sometimes, budgeting has some bad news: you can’t afford to spend what you’d like to spend. Other times, it has some good news. Many people have realised that they can loosen the purse strings a little, or afford to ramp up their investment or superannuation contributions. But they crunch the numbers first.
Looked at from the other direction, budgeting might tell you how much you need to earn to live the lifestyle you want. Many people have been inspired to increase their income when they calculate their present and future cost of living.
Either way, budgeting gives you very important information about your financial management.
Knowledge is power, and budgets provide powerful knowledge.
The really good news is that, despite what you might think, budgeting is really easy. If you can use a calculator you can complete a budget. This simple e-book is designed to show you how you can create your own income and expenditure budget and start to take control of your personal finances.
Please enjoy this e-book and feel free to pass it on to anyone who you think will find it useful.