BUDGETING TECHNIQUES & Terms Exploring Business & Marketing

Write a paragraph using the following Ch. 28 Key Words Money Management BudgetIncome Gross pay Deductions Net pay WithholdingExpenditures Fixed expenses Variable expenses Budget variance

Budget A spending and saving plan

Main Purposes of a Budget Live within Income Achieve financial goals Buy Wisely Avoid credit problems Plan for financial emergencies Develop good money management

The process of creating a budget involves: Setting financial goals Planning budget categories Maintaining financial records Evaluating your budget

Fixed Expenses Costs that occur regularly at the same amount each time –Rent –Mortgages –Payments –Insurance premiums

Variable expenses Living costs with differing amounts each time –Food –Clothing –Utilities –Medical/Dental

Allowance Amount budgeted for savings and other expenditures

Budget Categories SavingsFoodClothingHouseholdTransportation Health & Personal Care Recreation & education Gifts & Contributions

Budget Variance Comparison of actual spending with budgeted amount

Characteristics of a successful budget: Must be realistic Should be flexible Evaluated regularly Well planned & Communicated effectively with concerned parties Simple format

How are financial goals important to budgeting? First step of any financial strategy Helps decide where you would like to be financially Develop budget accordingly

Why are variable expenses more difficult to budget than fixed expenses? They vary from month to month

Factors that influencing budget categories Rent of facilities Business size # of employees Cost of living in your area Utilities costs Economy fluctuation Insurance benefits Payroll Product producing costs

Budget Variance—Should you change your spending plan? Not necessarily If you expect continued higher or lower expenditures, consider it!

Put it in Writing You may forget how much is to be spent or has been spent

Deficit When actual spending is greater than planned spending

The End!