Budget....

justin_murphy

justin_murphy

New member
Joined
May 7, 2006
Messages
2,852
Reaction score
0
Who here uses a monthly budget to track and save money?
This is a major goal for me in 2007. Not only for my busines but for my family's money as well.

What software do you all use or do you use the the paper and pen method?

Realy life experiences are what I'm after here.

Thanks all!!!

Justin
 
I wish I did .... as a Financial Consultant I preach this to clients all day. I have been lucky in that I dont live hand to foot each month. That said I do follow one rule .... 10% must be saved. Place it in the stock market, and I guarantee results over a 10 year window.
 
killrwheels@autogeek said:
I wish I did .... as a Financial Consultant I preach this to clients all day. I have been lucky in that I dont live hand to foot each month. That said I do follow one rule .... 10% must be saved. Place it in the stock market, and I guarantee results over a 10 year window.
Click to expand...

I already have a savings accout for my business which recieves 10% of all earnings. I'm finding it alot more difficult to track and budget do to my changing income......which changes daily!

Should I be putting all my income from business into a seperate account then paying myself a salary?
 
killrwheels@autogeek said:
I wish I did .... as a Financial Consultant I preach this to clients all day. I have been lucky in that I dont live hand to foot each month. That said I do follow one rule .... 10% must be saved. Place it in the stock market, and I guarantee results over a 10 year window.
Click to expand...

Scott, I am doing this with my company's 401k program, which is pretty much my only savings. Do you mean 10% in savings and 10% stock market, or 10% total? I'm currently putting about 10% into my 401k.
 
Business Income --- this income should be kept seperate from personal income and not commingled. Two reasons, first taxability. If you cannot prove it, and found under IRS audit, then you will be retaxed on it. They consider all unverifyable assets as income. Second, businesses are really sort of people. They needing lending to grow ... and in order to substantiate income (or repayment) they must show income, taxes, and growth. For self employed individuals , you are doing a diservice to yourself as it relates to social security and retirement also. Not claiming it, means it never showed. Ever wonder why some senior citizens get 25.00 monthly SS checks ??

--------------------------------
401K --- this is a big item for corporate America. Look into your plan and ONLY invest as much as they match. For instance, if they off a .50 match on each dollar you invest to 5% then this is your maximum. Why ?? There is no benefit to more, and you are likely in a small plan that only allows a couple of choices, choices that you did not original pick. Remember every dollar is taxable at removal, and severe penalties are established for early pull. (10% penalty plus recorded as income in year removed)

-------------------------------------
ROTH IRA -- Open up a self directed ROTH IRA and invest any difference between above and allotment Federal Government allows each tax year in a Roth. Why ?? You get to pick the choices, you can hold stock, bonds, mutuals, and many other items of choice. Plus everything it grows to over your lifetime is tax free at removal after 59 1/2. We dont have any idea where taxes will be 30 years from now do we ???

------------------------------------------------
Savings --- I implore every individual to also hide, save, or squander 10% of your take home funds into a nest egg. Why ?? The average individual needs 3 months plus in reserve to make a job change, and still pay the bills. Not every corporation is keen on severance packages, and the world no longer values long term commitments as much as current production or performance numbers. The easiest way is to force yourself to do so ... see you bank and setup a formal transfer once or twice monthly. If you have direct deposit do it there, you will NEVER miss it.

-----------------------------
Stock Market --- lets looks at history. To date, there has NEVER been a 10 year window where the stock markets did NOT outpace the banks. That said, we all have likely lost money in the market and become skeptical of it. Why ?? Because we got in once or neighbor stopped by to show off his new Lambo. You see, he got out. He bought his toy. So we go jump in as the market is coming down, and wham we get hit. Just as it bottoms out, we get out. HOLD .... BUY .... SIT ... RELAX. Allow your broker to get the stomach ulcers. Ride it , understand what you are holding. An Asset Allocation Fund has less risk then Sector Funds and on average do quite well. Look at 10% as being a sound investment. We are not pulling the handle at a local casino. Most of my clients who listened and kept hold of personal feelings, ended up the year with nice gains. 10-15%. My Cd on average paid less than 5% with around 3% going back as inflation, net 2% !!!

They said the Dow would not break 12,000. Well it ended the year at over 400 points over it. All time best at 511. This year was good to investors, and we are all looking to next year in hope. Cycles, it all runs in cycles and thats why 10 year increments are used. This is money you need to forget about ... leave it alone.
 
Last edited:
^^^^^^^^
Some of the best info I've seen. Very simple to read. I believe everyone should be reading this. Thank you so much Scott.

I am paying taxes. I've just been tracking it a different way. On paper. Starting tomorrow, 2007 is a different and new year.

Any other suggestions for us business owners?
 
Thanks Scott, you have found your place in this world;) I put the maximum allowable amount in my 401k that they will match. They used to offer 15% several years ago that THEY put into your retirement, now it's down to 3%. I can put in 5% and they will match me 4%. I could put in 15% of my income, but they would still only match 4%. I take another 10% and put in into a direct deposit savings account directly out of my paycheck. Never was much for budgets though:o I've got YOUR tastes, and...well.....MY wallet:p, which is not a good combo!!!!lol
 
Justin,

As far as software goes I recommend Quicken. Unless you want to have a system that will also manage payroll and receivables. In that case I would say Quickbooks.

Quicken will help you create a budget and provides reporting on how you are doing. It is very easy to use. I have used it for many years. I rarely write a check as I pay all bills online with Quicken and my Bank.
 
I currently use Microsoft Money to track all my expenses. A brilliant program that is easy to use and will show more reports, graphs and analyzations than you could shake your hat at.

I put a few thousands of dollars in stocks and have had great luck. Only purchase stock with money that you can afford to lose I say.
 
P1et said:
I put a few thousands of dollars in stocks and have had great luck. Only purchase stock with money that you can afford to lose I say.
Click to expand...

stocks, yes !! You are gambling on only one company. Mutuals , nope !! Invest in areas where you place the biggest part of your $$. Look to emerging markets .. ever wonder what it costs to ship Concrete to China ?? These are investments in your future ...
 
I'm with Killer myself. I have Quicken and have tried to keep track of our expenses, but it's such a hastle. While we aren't rich by any means, we make enough and I'm a frugal person anyway; so I don't worry about a budget. If I did use one though, I really like Dave Ramsey's system. I haven't read his book, but I've listened to his show a lot. You just make out a few categories like food, clothing, fun money, etc. and put cash in an envelope. And don't use credit cards. That way when the cash is gone, you are less likely to spend more than your budget. My wife's aunt and uncle started using this method a few years ago because they realized they had been blowing so much money, and have really been glad they use this method.

A good rule of thumb for savings that I go by is to have 6 months expenses in the bank or some other easily liquid asset like a money market account.

Right now my wife and I invest 5% in our 401K. I don't have any matching, so I really want to stop and do a Roth, but I just haven't gotten off my butt to start researching stocks.
 
Man, great info here! I put 15% in my 401K. My company matches only 5%. So I need to take that 10% of the 15% and put it in the bank? Right?
 
I tried Quicken, but found it more of a chore to keep it up to date than was worth the effort. I already kept track of my accounts, so Quicken was a bit of overkill.

I love investing. My wife and I both have 401k's, IRAs, plus I have an online stock account a full service brokerage account, A DRIP with GE. It's very rewarding to get a monthly statement that continually rises with some wise investing.

IMO, invest as much as you possibly can, then add on another 5%. You will thank yourself when you reach retirement age.
 
sparkie said:
Man, great info here! I put 15% in my 401K. My company matches only 5%. So I need to take that 10% of the 15% and put it in the bank? Right?
Click to expand...

Not sure what you mean Sparkie. You can't take money out of a 401k though without penalty until 59 or whatever the age is.
 
I think Sparkie means he'll choose NOT to put the whole 15% in retirement, instead only putting 5% in retirement and putting the other 10 in savings. He'll probably still get matched to the 5% he puts in his retirement.
 
sparkie said:
Man, great info here! I put 15% in my 401K. My company matches only 5%. So I need to take that 10% of the 15% and put it in the bank? Right?
Click to expand...

Not necessarily a bank, but into a ROTH IRA. You still are saving for retirement, but now on a tax free basis. You will not get to write off the 10% you now do, but it can do much better for you in a world 30 years from now if we do not get taxes and US Deficit under control, not to mention SS.

One other trick ... if you leave a company and have a 401k consider two options. One, move it. You can now move it to any brokerage family and change the elections to funds you truly want not some your company picked. Second, you can move it to a ROTH IRA without the 10% penalty for age. You will however still have to record it as income in that year. However, it may take several months to get a new job, and thus the perfect time as your income was already reduced.

So still save 10% or more, just make it work for you. If employer only matches 5%, then put the rest in something that "you" can use to make yourself money.
 
Just remember to move some of the money into less aggressive stuff once you get closer to retirement age. I don't think it's necessary to move it all to bonds and stuff like a lot of people advocate. For myself I think once I get within ten years of retirement I'll make sure I have 5-10 years of money in safe money makers in case of a bad stretch. By then the stock market will have rebounded from any possible downturn.
 
The first thing you want to do its go out and spend 10 bucks and get the richest man in bablyon. http://www.amazon.com/Richest-Man-Babylon-George-Clason/dp/0451205367

this book will give youa good understanding of what is needed in order to be rich. I know more then a few people who have read it and have become millionares, not over night but they are happy sucesfulll people.

Secondly, as an accounting student i get to use alot of accounting software(most times for fun).
Dont waste your money on a budgeting system. It can be done easly enough.

The fincial recored and the budgeting info are to diffrent things (i just finnesed a whole course on budgeting), since this is a simple detailing rig we wont get complicated on thins like variable overhead costs

You need to start by looking at the fixed costs(those that are the same each month)- this may be things such as insurance. Take this vaule (we will say $1,000)

Then we need to look at the costs to do each detail, or the variable costs. You need to figure out how much product you use on each detail, and how much it costs. This is a PITA, but will be worth it. This will take a few detailes to get right but it will eventually happen.

Then you need to look at the projected sale (or in this case detailes). I know each detail is diffrent but you need to find an average. A budget is never exact but we can make it close as possible.

So we will say that the variable cost per car is $5.00


now that we know ho much it costs we can look at creating a forumula, the more complicated the varaible cost, the more comlicated the formula. We will again keep it simple..

You charge 50 bucks per detail (again low)

X= detailes

50X=5X+1,000

45X=1000
X=22.22

so basicly this would mean you would need to do 23 detailes to make money, anything after that is profit less VA.

This is a quick budget, and with mroe info and more time you could nvest the better the budget and the mor relevent.

Also it might be a wise move to go talk with an accountant. IT will cost you a few bucks but they can do all this for you, they can give you recomnedations on how to make more money, such as reinvesting x amount, or looking at staying in this area.. they will help you out.
A computer is all great and fun for simple tasks such as book keeping, but you need to remeber most acountants have 7 years of schooling to get where they care going... in canada its a 4 yr degree plus 30 months of artiling and then a huge test, after that alot go get CFA, but thats a whole nother ussue.

I know this was kinda rambled and jumbled but i hope it helped, if you have nay questions feel free to pm me. I am a seconed year accounitng student so i amdone the small business part of school, now its onto corprate so i should know what to do. and if i dont my dads an accountant, and we knkow both canadian and american GAAP
 
You must log in or register to reply here.
Back
Top