Financial Planning & Budgeting

Financial Planning & Budgeting – I’m a numbers girl. Always has been, and always will be. I see things in numbers and fractions and percentages. Budgeting and tracking my expenses is easier for me because of this. But if you’re a visual person, you might find it a bit difficult to keep track of your finances.

So today, I want to look at a slightly different application – using a pie chart. Your financial health is made up of several factors – your income and expenses, assets and liabilities, and future goals/spending plans. But perhaps the biggest thing you can do to change your financial situation is to properly allocate your income between saving and spending.

Financial Planning & Budgeting

Financial Planning & Budgeting

When I took my financial planning course, my professor gave us some general metrics to use when evaluating our clients’ financial situation. He then used a pie chart to show what a typical person’s income breakdown should look like:

Importance Of Financial Management For Businesses

As you can see, only about 20% of your pre-tax income should be used for everyday expenses! This includes things like bills, food, clothing and entertainment.

You can use Excel to create a pie chart for you, or you can make one by hand. To use Excel, you can download a great spreadsheet and enter the numbers that apply to you.

If you want to make your own pie chart by hand, do your best to divide your income into each of the categories mentioned above. For each category, divide that amount by your total income, then multiply by 100. This will convert your expenses in each category to a percentage. Draw a large circle and divide it in half. Draw four lines in each half to create a total of 10 sections. Each of these sections represents 10%. Fill in the chart with different colored pencils or markers, fill in the 10 point squares to represent the categories that are more than or less than 10%.

Everyone’s pie chart will be a little different. The “ideal” pie chart I showed above may not be the best for you depending on your current situation and future goals. If you have 6 children you want to send to college, you need to put more in the “other savings” category. If your house is paid off, you should spend less than 28% of your income on just taxes and insurance. And if you want to retire at 50, you may need to save more than 10% of your income to do so! But in general, the chart above is a good starting point for estimating your own usage.

How To Prioritize Spending Your Money

If you can help it, you should strive to be below the above percentages for the housing, other debt payments, and everyday expense categories. You should strive to be on the right percentages for retirement and other savings.

Risk management (insurance) and Taxes will depend on your individual situation, but in general, you should strive to spend as little as possible in both categories while maintaining adequate coverage.

To lower your taxes, consider putting off more savings for retirement or education. Additional 401(k) contributions will lower your taxes; the amount depends on your tax. Traditional IRA contributions are tax deductible if you are below certain income levels and can make contributions. Roth IRA contributions won’t reduce taxes now, but they will help you save on taxes later. You may even qualify for a retirement savings loan! And if you’re self-employed, you have several options to save for retirement while minimizing taxes.

Financial Planning & Budgeting

If your chart looks very different from the ideal chart, look at some ways to increase your savings, lower your debt payments, control your insurance costs, and reduce your overall spending.

How To Budget And Plan For Future Purchases

You can receive my latest articles full of useful tips and other information for free directly to your email by entering your email address below. Your address will never be sold or used for spam and you can unsubscribe at any time. The financial plan should be built on the work plans (AMEC 2013) that contain the maintenance plans that the organization needs to implement. The work plans are described in more detail in section 3.4. The action plan should contain the schemes that have been prioritized according to the policy of the organization at least for the next year but for the next three to five years. It may also have a number of different work plans to be implemented depending on the funding provided (Lepert 2012). In fact, each group of assets, such as pavement, structures or lighting, should determine the costs of its work plan.

Depending on the funding available, there may be a need to budget for each type of asset, such as pavement or structures, from a single capital allocation. Traditionally, most organizations have allocated budgets on a historical basis. For example, roads can receive 60% of the maintenance budget and structures 20%. Therefore, the financial plan can be based on historical spending levels. Advanced organizations may consider prioritizing their assets to ensure that both assets that require the most funding for the organization to achieve its strategic priorities and those assets that may be critical to the organization, such as strategic bridges, are funded. This method of developing financial plans will ensure that the organization receives the most economic benefit. In doing so, however, the organization can accept that there may also be political demands to address.

One approach to allocating funding between different assets may be based on ensuring that better than maximum efficiency is achieved for each asset. In organizations with a comprehensive asset management program, this approach can be developed through a performance management system that links assets to strategic priorities and funding.

For example, if a bridge falls down, even if the asphalt on both sides is new, the road will be completely closed to traffic. Conversely, if the pavement on both sides of the new bridge is in very poor condition, traffic over the bridge will be severely affected. This example shows the overall focus of each value group to achieve broad strategic goals along the same path. Thus, consistency can be achieved by considering a standard level of service in this way. An alternative approach may be to consider the risk associated with the underperformance of the active group along the route. Overall, pavement management and bridge management are important asset issues that must be viewed holistically. Road wear and tear is visible to road users and can be more politically sensitive for road agencies. Deterioration of the bridge is controlled based on the risk and importance of the structure to the local and national economy.

The History Of Spreadsheets & Financial Modelling

Step 2 becomes a challenge when the budget is limited by the lack of sufficient funds to complete the required activity or eliminate the maintenance stay, which happens often.

It is important that the financial plan preserves the value of the assets in the ownership of the organization as much as possible. It is accepted that investment in roads contributes to the economy through well-maintained roads. Depending on the organization and its accounting methods, the financial plan can also affect the organization’s balance sheet. For example, if the financial plan does not maintain the network in sufficient condition, but due to known financial constraints the plan cannot prevent deterioration, then the value of the property will decrease. This can lead to additional financial burdens for organizations to finance this depreciation. Valuation is explained in more detail in Chapter 3.3 Valuation. Developing a financial plan that is sustainable should be one of the goals of the organization.

In the United States, the evaluation of the financial sustainability of the transportation system currently uses the modified method of GASB 34. GASB 34 requires state and local governments to report the value of their infrastructure assets in their year-end financial report on an accounting basis. Under this method, the loss in value of the asset is spread over the useful life of the asset. In this way, the budget for maintenance intervention appears according to the amount of loss in the depreciation of the property. More maintenance should, naturally, result in less wear and tear on the property. In other words, an increase in asset maintenance can be balanced, to some extent, by a decrease in asset appreciation.

Financial Planning & Budgeting

That approach does not consider the benefits of maintaining infrastructure assets for the total cost, including freight and people transport costs, environmental impacts, etc., which a cost-benefit analysis (CBA) approach can. GASB 34 also does not consider the risks inherent in the planning process (eg, unexpected budget cuts, traffic growth, extreme weather events), which a risk analysis does. Recently (2012), the MAP-21 law required local authorities to provide the following information (Applied Pavement Technology 2013):

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With this rule, it is recognized that assessment of financial sustainability requires prior consideration of life cycle cost and risk management.

The funding plan describes how much funding is expected over the next 3 to 5 years and where

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