Financial Planning

Money management can be a challenge when you’re out of work. If you are going to effectively manage your finances, it will be important to know exactly how much money you have coming into your household and how much is going out. When you experience the reduced income that comes with losing your job, it’s doubly important to track your income and expenses.

If you find yourself in a difficult financial situation, it’s crucial that you fight the urge to put your head in the sand and avoid the issue. Some people hide from their financial realities, never checking credit card or bank account balances because they’re afraid of the truth. That approach only leads to increased debt and financial stress. The only way to be in control of your financial future is to open your eyes wide to your current financial situation.

To start gaining control of your finances you can:

Track everything. Write down the money you have coming from every source of income as well as all of your expenses. Don’t cheat by leaving out a dollar here or there. It can be pretty surprising to see where you actually spend your money. Be realistic about your spending. If money is tight, you’ll aim to be frugal, but also be realistic about how much you need to cover the essentials, and don’t set yourself up for failure. Assess every one of your expenses to see where you can reduce your spending. Just because an expense is fixed, that is, it recurs regularly, doesn’t mean it can’t be eliminated or reduced.

Tracking your income and expenses is absolutely crucial to financial management. It’s the only way to know how much you have, how much you’re spending, whether you’re spending more than you’re making and where you can cut back on expenses.

How to Track Your Income and Expenses

I’m a big fan of using household budget software for tracking income and expenses. Yes, buying the software is a bit of an expense, but it’s a one time expense that, in my opinion, pays for itself in that it helps you to make much smarter financial choices on a regular basis.

I use the software regularly, and I always know on a daily and monthly basis exactly how much I have to spend and where my finances are headed over the long term. Tracking household income also helped me to feel comfortable that everything would be o.k. financially at times when money was scarce. I was able to review all of our past household expenses, find ways of cutting back and determine exactly how much we needed to meet our financial obligations.

I’ve tracked my household budget for so long, I can’t imagine ever being without that kind of information.

When you start using household budget software, it takes a little time to set everything up initially. It’s worth it though, because once you enter all of your financial information, it takes very little time to keep your financial information up to date. You’ll know where your money is going, how much you have to spend on a day to day basis, and where your finances are heading for the long term.

Budgeting is the process of forecasting and planning revenues and expenditures for a certain period of time. A budget refers to the list of planned income and expenses.

There are many methods of budgeting utilized by individuals, families, government institutions, medium-sized companies, and big corporations. All these methods involve identification of the sources of income and planning the intended expenses in a way that it would tally with the total income.

The goal of budgeting is to make a balance between the inflows and the outflows so as to prevent a deficit. This makes budgeting so important. Despite this, many people still do not know how to budget their money.

With the help of advanced computer technology, budgeting is now easier than ever, especially for individuals who are not inclined to doing this task. Budgeting software can now be easily downloaded from the Internet and can be used right away in planning your income and expenses.

Budgeting software varies in terms of their features. Some software is good only for personal and family budgeting. This type of budgeting software can help you keep track of your daily expenditures. It can effectively manage your credit card spending and make a household financial plan. This kind of software usually costs about $10 to $40. Such programs usually offer a free trial, so it would be better to try them first before you purchase them.

Software that is specially designed for managing big corporate budgets is more complex in nature. It has more features compared to personal and home budgeting software. These can aid you in creating an accurate budget, making financial analysis, creating financial statements, consolidating financial reports, and managing and planning transactions and business workflow.

Inexpensive corporate budgeting software is priced at around $30 while more comprehensive versions of the software are sold from $70 to $80. Some are subscription-based so you have to pay either a monthly or quarterly fee rather than a one-time fee.

Do you need help creating a monthly budget that works? Just follow the seven tips below and you will be well on your way to creating a working monthly budget.

Tip #1 – Know Where You Are – It is important to know where you are financially before you create a month budget. This process includes documenting all your income sources, what you think you spend on expenses each month, and listing all your creditors and the debt that is owed to them. By doing these three things you will get a better understanding of where your finances stand.

Tip #2 – Track you spending – Tracking your spending for 30 days before creating a budget will give you the concrete numbers of how much you spend in each expense category every month. Many people are surprised to see how all the little purchases at up at the end of the month. By knowing how much you typically spend in each expense category you can now plan those expenses for the next month in your budget.

Tip #3 – Plan for periodic expenses – When creating a monthly budget that actually works you will need to plan ahead for periodic expenses such as car insurance (if not paid monthly), yearly car registration, gift giving, school shopping, and insurance deductibles just to name a few. If you estimate these expenses for the year and then divide by 12 you will get an amount that you can save each month for these expenses.

Tip #4 – Allow for Savings – It is always a great idea to plan to save a certain amount of money each month. This can be the beginning of an emergency fund so when unexpected expenses come your way you don’t have to reach for your credit card. This is an important step to getting and keeping yourself out of debt.

Tip #5 – Write Needs/Wants on a Special Worksheet – As members of your family express certain needs and wants, it is helpful to record them on a needs and wants worksheet. This will help to spend money wisely as it becomes available instead of make impulse buys and forgetting what you really wanted or needed.

Tip #6 – Use the Right Worksheets – When creating a budget it is helpful to use the worksheets that will have all the information you need to make a working budget. These worksheets should include a way to track spending, your repayment of debt, a monthly financial report and a monthly budget worksheet. These worksheets will make it easy for you to see all the information you need to create a working budget and show you expense categories you can adjust to make a balanced budget.

Tip #7 – Allow Yourself Some Mad Money – The best tip you can have when creating a monthly budget is to allow some mad money for yourself and spouse in the budget. This is the number one reason most budgets fail and people do not continue using a monthly budget. The resentment of not being able to spend any money makes people frustrated and then they stop tracking their spending all together. If you allow yourself and your spouse even a small amount of money to be spent on anything you wish without having to confer with the other person, your budget will have a much better chance of being successful. If money is tight just allowing a very small amount will help keep the resentment at bay.

When you start working with making a household budget it is extremely important to track your spending and all your expense both on a weekly and monthly basis. Many people dread tracking their expenses and recording every receipt but this is by far the best way to gain control over your spending. There is always a huge gap between what people think they spend and what they actually spend each month. So, tracking your spending is the only way to establish a working budget.

In order to track you spending you will need the following two budget worksheets:

#1 Weekly Expenses Report Worksheet – On this worksheet you will record all the spending for a given week. You will want to have four copies of this worksheet for a given month. Carry it with you to record expenses or make a habit of recording expenses at the end of the day with your daily receipts. Make sure to include a description of the item, the date purchased, the amount and the expense category. You will also want to write down how you paid for the item whether by cash, check, or credit card. This will give you a very detailed report of your weekly spending.

#2 Monthly Expense Record Worksheet – After you have filled out your weekly worksheet for a given week, you will want to transfer all spending and expenses over to the monthly expense record worksheet. It is very helpful to first fill out the weekly expenses report worksheet because people forget to record certain spending when just using the monthly expense record worksheet along.

After filling out these two worksheets you will have effectively tracked your spending for the month. Using the monthly expense record worksheet, you will now have the information you need to create a working budget for next month.

Debt reduction settlement and the debt negotiation, one way or another is the same thing and used to achieve the same task, a debt reduction settlement for a debtor from his or her creditor, to pay a reduced amount than the actual amount taken. Where it is a very viable exercise for the debtor at certain stage of his debt, it is very much relaxing and either tempting for the creditor who is hopeless to get his amount back and have become so desperate to file a bankruptcy.

Averagely the whole process takes twenty months with an average advantage of debt reduction settlement in 40%-60% and as you are confronting your creditor with a counselor, you have to pay the party 10%-15% of the deal amount so, accumulating all the odds, you end up with a 40%-45% savings anyhow.

Here it is important to keep in mind that these types of negotiations do not involve debts which are secured or backed by some certain security, pledged property, vehicle or insurance policy and only involved credit card installments and the debts which do not acquire any security, thus unsecured and creditor does not have anything to claim in and sell to get back his or her dues or even the full payment.

One of the major reasons why it is feasible for unsecured debt and why creditors are accepting and availing this option for their debtors rather than filing a bankruptcy is the element of loss. The loss of the original amount, as there is no security involved and they can not possibly sell anything to get their actual or to get a partial payment amount, forces them to agree on this settlement. so whenever they find their debtor is not paying the amount of the installment they without doubt go for a personal note, run agents behind you to locate if there is any problem so that they successfully get things done in their favor.