Tag Archives: budgeting

Tracking Where Your Money Goes With Sankey Diagrams

Sankey diagrams are a type of flow diagrams with differing widths of arrows that track where an initial amount goes.

They make for a great budget tool to see how your money ends up going. You can easily plug in your weekly or monthly expenses and paychecks or even put in your yearly W2 data to track our how your expenses and money have been going.

Sanekmatic.com is a great free tool to make your own charts.

Here is sample Sankey chart made using SankeyMatic:

Is It Practical to Use Zero Based Budgeting

Business owners and top-level managers invest a lot of time budgeting and in bigger organizations, the process itself incurs huge costing. In traditional methods of budgeting, the managers are required to review the previous year’s budget and then make amendments based on the performance expectations. However, in Zero Based Budgeting (ZBB), a completely reverse approach to planning and budgeting is applied.

Zero Based Budgeting doesn’t take into account the previous year’s budget and is instead begins at Zero. The managers need to justify all the budgetary expenses and not limit themselves to the previous year’s budget. Everything starts at zero and the planning and decision making is done on the basis of budgeting. One of the prerequisites of this budgeting is that the mangers need to be ready for detailed documentation and budgeting. The managers also have to identify and even justify the expected expenditures and arrange the activities in accordance to their relevance and costs.

Zero Based Budgeting paves the way for the high level management to make decisions as well as budgetary curtailments based on the documents during any time of the financial year. There is no provision of pre-financing as is in the case of traditional budgeting. This is a big reason why this type of budgeting is followed in the non-profit sectors and government. However, Zero Based Budgeting has to undergo frequent reviews, usually every year, as it is a costly and time-consuming process.

People favoring the Zero Based Budgeting usually point to the following advantages:

  • Resources are allocated vis-à-vis requirements and benefits, which is extremely efficient
  • Managers are compelled to find cost-effective methods for improving activities
  • Inflated budgets can be easily detected
  • Service departments find this to be extremely efficient because often it’s difficult to identify criteria

 

Naysayers point to these disadvantages of Zero Based Budgeting:

  • It’s time consuming because defining expenditures is often challenging for the managers
  • Zero Based Budgeting needs too many support staff and managers to prepare
  • Managers have to be given prior training on this method of budgeting before they can actually begin the process, which again is time-consuming
  • Everyone has to be aware of the details as huge volume of data as well as forms are needed for effective Zero Based Budgeting

 

Zero Based Budgeting is considered to be an honest approach to budgeting but when it is not too practical for private organizations and larger businesses to follow. They are bound to face capital and manpower shortage while trying to implement Zero Based Budgeting.

Just a Tip

Saving money is something we all struggle with from the young age of 16 to the adult age of 50.  After a little experimenting I have found a couple simple and easy ways to save money.  As a college student, these few methods are very simple and very do-able.

Bank Your Change

You may have heard of programs like this on television.  You use your card to make purchases and the bank rounds the purchase amount to the next dollar, putting the difference into the account of your choosing.  For me, the account my change is placed into is my CD account. When starting a CD account, you choose how long you wish to keep your CD untouched.  That means you will be forced to save money through saving your change.

The Jar Technique…

…otherwise known as the literal save your change technique.  I do not like to carry cash, but when I do I try to break it down to as much coin change as possible.  I think put it in an old mason jar and save it to a certain date or till the jar is full.  I also like to put my one and five dollar bills in the jar.  If I have something planned, like a dinner date with friends, a bowling night with family, a car wash, etc., I get the money in cash and put it in the jar as well so that I know I have it when I need it.  If you are like me and spend cash when you have it, the jar technique is an experiment you may want to invest in.

Savings jar
Even spare change put in a jar works for saving.

These are two small and simple ways to save money.  Whether you are a college student scrimping by for loan payments or an adult just trying to save a little pocket change, both these methods are worth your time.  Check them out and let me know how you do!

How to Juggle College Finances

With disposable income becoming a bigger and bigger problem both in the United States and globally and inflation and the economic situation increasingly unpredictable, investment in aspects of our lives like education is becoming harder to manage.

college finances

College education, of course, makes a critical the most important part of one’s education and is traditionally a major source of concern for the majority of families in the United States.

College education represents an expense process that covers many facets, and for a lot of people, the one thing that is focused on is tuition fees. Of course tuition forms a critical part of one’s college education but several other expenses play a role as well, without which the college degree may be encumbered or possibly not even achieved.

Apart from tuition fees, colleges have different fee structures that include registration, and access to different facilities at the university that may not be included in the tuition fees structure.

Daily living expenses are also important, as one needs to take into consideration meals, accommodation, transportation and things of that nature. Study materials, like text books and laptop computers cannot be ignored either.

All these and many more mean the study process for a college student is a difficult and expensive one for a lot of people.

However, there are a number of ways of reducing the cost implications covering the requirements of a college education.

Keeping the college choice within your state of residence or home states cuts back on transportation costs considerably and makes access to scholarships easier especially if you focus on those which are within your locality; people tend, surprisingly, to ignore these.

You can also consider the advantages, cost-wise, of using community college, which have particularly pocket friendly tuition rates and permit one to carry college credit accumulated in high school.

Applying for Free Application for Federal Student Aid doesn’t hurt at all, especially if you have more than one child attending college. You may just fall through the cracks or the criteria can include you because of the obvious implied financial strain.

Once in college, it is important for the student to remain focused on his or her studies and goals. All those extra semesters or papers carried forward imply additional costs that add to your financial load. Some universities also offer programs that help you save or recoup on certain costs like tuition, travel costs for visiting family as well as text books (http://www.usnews.com/education/best-colleges/articles/2011/08/24/colleges-offer-hidden-savings-to-students). It helps to be on the look out for such initiatives.

Being prudent with your money at this point in your life is always going to be a challenge but it forms an integral part of learning financial discipline. Look out for student discounts in college towns, which are usually on offer at restaurants, shops and clubs. Prioritize your technical needs, for instance, do you really need to have a printer in your room? Make the most of what the college does offer you, like meals which make an unnecessary dent in your personal expense account when you eat out.

When looking to cut costs or save, it’s more often than not, the little things that actually count and the same applies to college-related expenses.

Budgeting College Style

Every college student knows that money does not exactly grow on trees. Sometimes you have to make choices about what you do or buy based on how much money you have. This is called budgeting and it is an important skill to have, especially in today’s economy.

college saving

The summer is an especially hard time to budget because of all the fun stuff to do and the free time to do it, but the more you save now the more you will have come the fall, and the start of the school year.

A few tips to help budget and save money are:

1. Limit how many times you go out to eat, each time you go out you are typically paying for food at a higher price than you need to. For lunch it is easy to buy cold cuts and make sandwiches instead of going to a deli to buy them. Not only will it be cheaper, but cold cuts can last for several meals making the cost even less.

2. Try to find free or cheaper things to go to. Look around your area for free activities such as concerts, fairs or even just going to the park or the beach. It is easy to find fun things to do that are free or inexpensive if you just spend sometime looking for them.

3. Keep track of your spending. If you keep a record of what you spend your money on, you not only will see how much you money you have and how much you are spending, but you can also see what you do not need to buy, and places where you can save a little extra money.