Three Types of Budgets

download (90)Whenever someone is working on a financial goal, one of the topics that comes up is working with or within a budget. The fact is that there are three distinct types of budgets, each with their own structure and approach. This subject is definitely not a “one size fits all” topic. Understanding the different types of budgets will help you track the right information for the task you are working on.

Operational Budget

Most of the time when someone is talking about their budget, they are referring to an operational budget. An operational budget is one that tracks ongoing financial activity. This the day-to-day budget of a business or a family.

An operational budget tracks both income and expenses. The purpose of this document is two-fold. First, by tracking all financial movement, or “cash flow”, a person can get a much clearer picture of the financial situation. Hopefully, this picture will allow a person to make any desired changes in an efficient manner. Second, the focus of this budget is on the difference between income and expenses. In a business, this is the profit; for a family, this is the “fun” money. What to do with this difference is another topic, for another time.

Project Budget

A project budget focuses on controlling expenses. The idea is there is a certain fixed amount of money available to pay for everything. By tracking expenses, a person can make sure that everything will be covered. When a person delivers a result “on budget”, this is the type of budget being discussed.

The key is to track expenses, enabling decisions to be made correctly. Questions about buying resources, hiring people, purchasing advertising are typically discussed in this context. Income is typically fixed at the beginning of the project or available in clearly defined amounts. Often, a project budget references an operational budget.

Goal Budget

A goal budget is where a target amount of money is set and the amount of income is tracked. If expenses are tracked, they are done so only as an impact on the income. For example, a fund-raising project is handled this way.

Any expenses tracked in this budget are simply expenses directly related to getting income. For example, a fund-raiser may purchase envelopes to distribute so that people can mail in donations. The primary focus is the rate of growth of the amount saved. Again, this effort can be related to other, more comprehensive activities, such as a family saving for a vacation as part of their overall budget.

Having the Right Structure

When a person is creating a budget, having the right focus is a critical element of success. Understanding the different kinds of budgets can really help setting the emphasis correctly.


The 3 Financial Types of People in the World

download (92)There are 3 types of people in this world when it comes to finances. They are the Perpetually Broke Person, the Well-Off Person, and the Highly-Wealthy Person.

The Perpetually Broke Person never has any money and ultimately lives paycheck to paycheck. This is sometimes due to economic hardship, but these people exist every pay scale as the Perpetually Broke Person is always spending their income immediately after receiving it, and how much income is less important than how quickly they spend it. This is mostly on consumer goods such as clothes, electronics, and other items that can empty a bank account quickly. Another aspect of the Perpetually Broke Person is that they are amazingly good at giving away their future wealth by getting loans on things they don’t need or can’t even afford such as new cars, home improvement projects, and vacations and getaways.

The Well-Off Person is the next step up and does much better financially then the Perpetually Broke Person as they know how to manage their money by saving it for emergencies and big purchases. They also have good credit scores because they pay their bills on time and know how to take out loans responsibly. This allows them to grow wealth slowly and live well for most of their life. However, because the Well-Off Person usually is dependent on their job, they can find themselves in dire straits if they are laid off, injured and can’t work, or have other costly events that dry up their savings. This mostly due to the fact they are afraid to invest in anything, but sure things.

The Highly-Wealthy Person on the other hand knows how to manage their money by having an emergency fund, has a high credit score by paying their bills on time, and know how to take out responsible loans just like a Well-Off Person. The only difference is that a Highly-Wealthy People know how to make their money work for them with or without them. They understand these 3 Principals of Money.

Principal One: You can’t do everything yourself.

When creating wealth, the most important principle you need to take to heart is to understand you can’t do everything yourself. Which is why when you’re creating money with your money, it’s important to know you need to delegate a lot of the work to other people. Especially in hiring people. For example, in real estate you hire contractors to do your fix n’ flips and hire a property manager to manage your buy n’ holds. You do this because even if you know how to do it, it doesn’t make any sense for you. Why focus on only one or two properties when you can have ten working for you by having the right people in charge. In stocks, why would you learn how the market works and plug yourself in when there are people you can hire to do it for you 24/7. Instead, enjoy yourself.

Principal Two: You have to take calculated risks.

Principal Two simply means you have to risk money to make money. If you don’t risk anything, then you can’t make anything. This is the pinnacle of investing and what keeps many people from doing it. As they are more worried about losing a hundred dollars on a bad investment and would rather spend a hundred dollars on something worthless they don’t need. This makes many investors afraid to pull the trigger when investing and fall for the fallacy of the perfect deal. Where they will turn down even the best deals because they believe there will be a better one over the horizon. The only way to overpass this fear of losing your investment, is to embody the concept of Sunk Costs. Sunk Costs are costs that you have sunk into an endeavor that will never pay off and you will never get them back. The idea behind sunk costs is that although they are lost forever, it should not affect your decision in shutting down the investment. If it isn’t going to work, it isn’t going to work and you need to accept beforehand that the funds spent were a calculated risk and their loss was expected to happen if it failed. Accepting sunk costs will allow you to avoid throwing good money after bad.

Principal Three: If you can’t understand it, then don’t invest in it.

Too many people get into the hype of something. They listen to too many experts on the subject. Too many experts on the news. Too many “experts” in their family and friends. And they find themselves putting all their money into something they have no understanding of. This can be from complicated companies, products they use but have no understanding of their business model, and other financial instruments that are hard to explain, let alone understand. This is why for many investors, they need to stick to what they know. If its stocks, stick with stocks. If its real estate, stick with real estate. If it’s a business or company you know through and through, then stick with it through and through. The idea is that you have to an understand an investment, how it works, and its ability to grow in the world we live before you invest in it. This entails having to research the subject, know its past and present, and the major things that can affect it. The only way you can ensure you don’t get screwed is to have at least a basic understanding of what you’re investing in.


Knowing what financial type of person you are will allow you know where you need to go from here. Knowing if you spend too much money and bust your budget means you have to create financial discipline. If you are defensive with your money but seem to want more, than you need to start thinking about how to take more calculated risks. If your wealthy, you need to figure out better investments to get higher returns so you can even do more than you ever could have imagined.

Lucas M. Thomas, has been an effective businessman and entrepreneur starting his very own Professional Writing Services Business in early 2011 while attending Arizona State University.

Known as LT Copywriting it grew from writing Advertising and Persuasive Copy to Technical Writing, Ghostwriting, and Editing Services.

Allowing him the knowledge he needed to become a professional marketing consultant for small and large business.

In May of 2014, he graduated from Arizona State University with his Bachelors of Science in Management, his Minor in Economics, and 2 Certificates; One in International Business and the other in Small Business and Entrepreneurship.


10 Tips for a Better Couponing Experience

There was a time when people bartered for almost everything. Nothing went at full price and negotiating was the norm. Couponing, in a sense, is a return to the days when buyers made their best deal with sellers, saving hard-earned cash in the bargain.

I’m not an extreme couponer, but I do save money every time I shop at my two primary grocery stores. Plus, I save money via coupons at other retailers, and it’s like putting cash into my pocket.

The most practical way to start couponing is to have a system that makes sense for you, is a process you’ll regularly follow, and doesn’t overburden an already full schedule. The following are tips that will help you develop a money-saving process using coupons that fit into your normal weekly routine.

Start by setting aside the same day weekly to clip, sort and file coupons. Thinking through the process and journaling transactions will help set up a routine. Successful use of money is always set upon routine. Using a journal system with couponing can add personal depth to the process. You can plan menus, record thoughts, and note experiences or anecdotes.

Sort, file and toss coupons regularly. Give thought to a system that will let you order and use coupons with your best efficiency and ease. Storage boxes, card files, baseball card holders, notebook sheet protectors are just some ways to store coupons. Find your best system and experiment as much as needed to simplify the process.

Begin your shopping experience on home turf so to speak. Kick start your couponing at often used grocers or discount retailers as a good way to get your feet wet and begin fine tuning your process. Knowing the store layout puts the focus on matching savings to purchases and holds item hunting to a minimum.

Only buy stuff you use. A good savings is no savings for items you don’t or won’t use. Have a shopping list and stick to it. Remember, a coupon used just to save money equates to impulse buying and wasteful spending.

Clip just the coupons you’ll use. Also, coupons left intact on full-page sheets are easy to organize. Be careful with “brand commitment” you might now have. Brand loyalty can become contrarian to money-saving, so make wise decisions about brand loyalty.

Another way to see brand loyalty is to admit that some brands favored for personal reasons. While extreme couponers may suggest that you never pay full retail for anything, you can ignore this thinking. I suggest that you not allow couponing to rule your life or force substituting a brand that you don’t like at all for one you really do prefer.

Try to use coupons on double and triple days. Also, use coupons when they apply to cut-rate sale items, and for really good savings look for stackable coupons. These are manufacturer and store coupons paired together. By all means, find a coupon for any big-ticket buy.

Getting the best deals may mean shopping more than one supermarket, big retailer, or other store. The rule is to follow sales wherever they may happen. Don’t lose sight of your goal, which is total cash saving.

Everything has its jargon, and couponing is no different. Understanding the coupon language will make a noticeable difference in money savings. Below are some common acronyms used in couponing, and the list is endless. Also, the site is a good source for acronyms.

  • OYNO – On Your Next Order
  • MIR – Mail-in Rebate
  • BOGO – Buy One Get One
  • AR – After Rebate (as in the price after you figure in the rebate savings).
  • CO – Cents Off Coupon

Couponing is cash. It’s cash you don’t take out of your pocket or checking account when spending on necessities. The secret to couponing is to find your best method and use it to save cash every week.


Highlights Of Automated Travel & Expense Management Solutions

download (89)As your business reaches international levels and competitions get tough – the need for speed is imperative. It is of utmost importance to explore different options for quicker success, but it also calls for upgrading your business with the latest technological developments in order to keep pace with the changing times. One such development is Automated Travel and Expense solutions for an organization. Gone are the days of manually collecting the receipts. Your crew counts on your ability to help them at all stages of professional life. Considering that everyone now uses mobile phone applications, what if you could offer them a user friendly, fast and smart solution for Travel and Expense Management? This virtual based solution is not only faster and easier, but cheaper also which makes it a viable solution for Small and Medium Enterprises.

Only 42% of SMEs have given enough thought and importance to appointing a Chief Financial Officer, says the latest Small Business Accounting survey. And this number drops drastically for companies that accommodate less than 25 employees. This calls for an immediate action. If you are still confused why adopt this automated solution, we have created a list of reasons that you must infer to:

1) Smart Technology: Mobile-friendly expense management solutions help you track, manage and restrict employee expenses with just a click. Not just that, it also helps you save a lot of time!

2) Synchronized Prepaid Business cards: The standard usage of synchronized prepaid cards would eliminate the manual card entries for expenditures like travel booking, client servicing et al.

3) Virtual Receipts: Believe us when we say that no employee would appreciate a boss who makes them carry receipts back to office after an exhausting business trip. All they have to do is, click a picture and upload it with a touch. It would save your auditor’s time also when they sit down to review them.

4) Increased Transparency: An employee would prefer if the company adopts a modern and transparent process of filing reimbursements, expense management and taking approvals. It would also eliminate the cases of dishonest claims and minimize fraud.

These reasons should be enough to inspire you to make a move, to go ahead and opt for such automated expense management solutions that not only increase your business productivity but also keep your employees happy! Needless to add, it makes you come across as a good boss too! Now if you are looking for saving time and money, or increasing your team’s productivity, you know what and how to improve.


How To Stretch Your Salary When You’re Stuck

download (87)Sometimes your salary isn’t paying quite enough to cover all you wish it could. Maybe you got promoted to an exempt position that looks good on your resume, but now that lucrative overtime bonus is gone. You could have been offered benefits that you truly need (medical insurance, for instance), and on paper it all looks good, but in your wallet there’s not enough cash.

This is where that “B” word – Budget – comes in to help.

All the experts start with an honest assessment of where your money is currently going. If you don’t know where your money is currently going, how can you control its flow? Write down all the ugly reality on paper so you can look it in the face and deal with it.

The problem isn’t automatically solved by a higher salary; it is solved by controlling the way you spend what you earn.

You can see this in the sad tale of many lottery winners whose huge chunks of money are gone in a few years or the way even high earners go bankrupt. This means that you have hope because you can control your cash flow by choosing to work with the real numbers instead of the dream numbers.

Look at the real numbers and come up with a real plan and follow it:

  • Do some research on money management. There is so much wisdom and free advice or seminars out there that your head will spin, but the reality is you have to make it work for your situation.
  • What are you willing to sacrifice to keep that steady salary or those benefits?
  • When you make the choice NOT to spend, remind yourself that you are saying “no” to this thing and “yes” to controlling your cash flow. You are the boss of your spending.
  • Pay the minimum on your bills if you have to, but add a little when you can. Somehow, that extra gives you a sense of power.
  • Allow yourself some “mad money” that you can spend on whatever you like, but when it’s gone, it’s gone until you get paid again.
  • Somehow, keep saving for emergencies. Even a little bit adds up!
  • Sell some stuff and put the money on the biggest bills.
  • Come up with ways to reward yourself that don’t cost money.

Keep a reminder of your plan, and your goals, in view. You aren’t “stuck” with that salary, you have chosen to stay in the position for a reason. Is your reason still valid? Can you ask for a review and a raise? Are you utilizing all the benefits you have? You may need to sit down and crunch numbers with others who are involved with your money decisions, but it will be worth the time and effort that takes to get everyone on the same team in this!


Pension Crisis – Are You Ready For Retirement?

download (86)After working so hard for so many years, many retirees expect to have a very comfortable life after retirement. Most employees who are pensionable feel at ease knowing that they at least have the pension to keep them comfortable after they retire. However, this has not been the case for many retirees; most have retired only to find that they have very little to live on making life quite uncomfortable. Pensions for state public employee continue to face serious issues with funding and this has left many retirees frustrated because the features and benefits expected are no longer guaranteed.

In reality, if you want to have a comfortable life after retirement and you wish to be independent rather that dependent on your children, it would be best that you start preparing for that phase of life early enough. It helps to have savings and investments to back up your pension and any social security benefits you are entitled to. You can only say that you are ready for retirement when you have much more than pension to look up to for that comfortable living. Fortunately, it’s never too late to start preparing for retirement; there are so many small changes you can make today in preparation for a good retirement.

What to do

When preparing for retirement, the first thing you should think about is a personal savings reserve. This will save you from rising living expected that can render your pension insufficient. You also need to remember that social security and pension benefits can only cater for up to 60% of your needs and hence the rest would need to come from income or personal savings.

The other thing you must start thinking about is your health. Remember that as you age, you become more prone to illnesses and they can cost you quite a bit of your pension and savings that you have. Start adopting a healthy lifestyle today and you will have a long life with fewer health issues to worry you and your finances. The last thing you want to do is to run out of money in your last days when you actually need it the most so make every possible plan today to secure that future.

Start reducing debt and as much as possible, avoid getting into any new debt. This is a great approach, especially if you are a decade or two from your retirement. Paying off your debt early before retirement secures you from worrying monthly bills when you retire. Get your debts together and come up with a strategy to start paying them and get your expenses in line so you are able to avoid incurring any new debt.

As far as social security goes, it is advisable that you don’t start collecting your benefits until it is absolutely necessary. These are tempting benefits because they can be enjoyed even before retirement, but it is best that you delay the collecting for as long as you can so you can use them when the need arises. The longer you delay, the larger the monthly check.

Spend Less On Your Car – 5 Tips

download (88)Your car. You need one, we all need one. This necessity means that we are going to spend our hard earned cash on these things. So which ways are there to keep our spending in check in our cars?

Let’s look at a few ways to keep the miles ticking over, and the pounds firmly in your pockets.

1) Insurance.

This is the enemy of the pockets of all young drivers, and sometimes older drivers can be stung too. So how can you keep this enemy at the gates? This is a simple fix, use a comparison engine. It’s been said again and again, but it is very common for people to just stick with their insurer. Loyalty will get your wallet nowhere in this game! Make sure you look around, and always keep these pesky insurers on their toes!

2) Driving speed

Keeping your speed low on the motorway can save you hundreds of pounds, per year. If you use the motorway frequently, we are talking in the thousands. Remember, this is all tax free money that you could be using for something else. So remember, the speed limit wasn’t designed for optimal fuel consumption, it was designed for safety. So if you view your driving a little slower as an investment to your back pocket and your future it will help. Keep the speed low, and get to your destination a richer person.

3) Buying costs

Always remember, that with a more expensive car, come a more expensive recurring cost. Your car isn’t just a one off payment. Depending on the group your car falls into, it affects your insurance. If you need replacement parts, or specialist work, that is more expensive. So view your car as a subscription service you are paying. The higher the initial cost, generally the higher subscription cost you are also paying. If you can make do with a smaller “subscription” that will mean more money in the bank, less in the hands of Mercedes!

4) Petrol/Diesel

The fuel you use in your car can have a big effect. These days, the gap is closing between the efficiency of petrol and diesel. But traditionally, diesel cars are more fuel efficient. On the flip side, hybrid or even electric cars are even cheaper! Taking into consideration these could results in a much lower cost of driving for you.

5) Drive less

This may defeat the object of having a car, but often, if you are able to commute to work using public transport, the overall cost of driving will be far reduced. This may not be feasible for your circumstances, but in big cities, this is almost always the best option!


Prior Planning Prevents Poor Performance

images (31)Living a life full of joy and peace requires that you are financially secure. No, not wealthy, no not rich, but financially secure. Don’t get me wrong, I am not saying that the way to joy and peace is money, but you will never experience true joy and peace while being in debt. These are principles that I was taught at a young age.

I was never given an allowance rather, I earned a few dollars by sitting on my father’s lap while “we” drove the lawn mower around. I was taught first, to give back to God what He has blessed us with. Second, wise spending leads to a wise future. Then lastly, save everything I can. Dave Ramsey, a well-known Christian financial expert, was and is my role model when it comes to budgeting money. One of the greatest statements he ever said was, “Know where your money is going before you ever spend it.” It was on this statement that I started my first budget, and it is on this statement that I will explain how to become financially secure at a young age.

No matter what your salary is, budgeting is absolutely necessary. If you have no budgeting system, then you will spend far more than what you think you do. Without realizing, you get Starbucks every other morning, a meal out with friends once a week, a cool piece of clothing that you have been eyeballing lately, a snack and soda at the gas station. Next thing you know, you’ve spent an extra $250 this month; you have no idea where it all went and you are dismayed at why you aren’t able to save any money!

The first step when you don’t have a budget is to save every receipt from every purchase you make over a month. Spend like you normally would, splurge like you normally would, but keep every receipt while doing it. At the end of the month, separate all your expenses by category and gawk at where your money all went. You probably spent $75 on gas and $350 on fast food. Now that you know where all your money is going, you can cut off the fat from some areas, and bulk up in other areas. Gas, bills, food, and housing are essentials (just don’t live outside of your means). So protect these areas of your budget. Make sure that what you are making is covering those essential items. From that point, you can get creative. If you enjoy buying a new outfit once a month, or a Starbucks drink once a week with your friends, write that into your budget. At the end of your budgeting, you have to make sure your expenses and savings match your income.

The second step is to get your money that you plan on spending out of the bank after each paycheck. Working on an almost all cash system will keep you from spending more than you want. Say you withdraw $30 for clothing from your paycheck. After spending $30, guess what? You have no more clothing money to spend from. Use envelopes or folders to organize your money by category. Have a different envelope for each category in your budget: “Tithe,” “Gas,” “Rent,” “Utilities,” “Entertainment,” etc. Then once you have spent all the money in that envelope, you stop spending. This requires discipline.

These are the first two basic steps to becoming financially secure. If you are able to master these first two steps and stay disciplined while doing so, you will start to see joy and peace in your life. Even if you have thousands of dollars of debt, these are the first two steps you must complete if you ever want to get out of that debt. Know where your money is going before you ever spend it. Don’t spend money you don’t have.

Save all your receipts and see where your money is going. Budgeting according to your spending habits and cut the fat. Use cash for your own accountability purposes and once your cash is gone, no more spending.

8 Apps and Sites That Will Put Cash in Your Pocket

images (30)Are you living paycheck to paycheck? If you’re like a lot of people, your cash barely lasts until the next payday. While a windfall would be nice, it’s not likely. With little effort you can tweak your spending habits and maybe have a few dollars left over at the end of the week. Save a little here and you can spend a little there.

There are many ways to cut spending, save money and make a little extra cash. While each method may bring in a seemingly insignificant amount of change, together they add up to big savings. At the end of the week, you’ve managed to hold onto a good amount of your hard-earned dough.

Here are 8 ways to turn a pinch of technology into some great money-making opportunities:

1. InvisibleHand is a browser add-on. When you shop online it lets you know if there’s something less expensive out there than the item you’re about to buy. It works with Google so that when you Google something, it automatically checks for the lowest prices of that item and alerts you. There prices are real-time, meaning they are the price as of now, not yesterday or this morning. When you’re not shopping, the add-on stays hidden, so there’s nothing in your way. This is a great way to save money!

2. PriceBlink works in the same way as InvisibleHand. It automatically searches over 4000 merchants while you shop to bring you the best deal available. It also has the added feature of alerting you to coupons for the items you’re shopping for now and allows you to keep wishlists for items you want later.

3. GiftCardGranny is a site that sells discounted gift cards. If there are stores you shop at frequently or you are going to make an expensive purchase, buy the gift card at a discount and use it to save money on your purchase. You can also sell gift cards here as well as check balances and search for current deals and flash sales.

4. has hundreds of coupons for all sorts of stuff. Before you buy, see if there’s a coupon for your item. To get multiple coupons, just check each one you want and print them all at once when you’re done.

5. GasBuddy saves you money on your travels. While you’re busy driving around on your shopping trip, GasBuddy will show you which gas stations in your area are offering the lowest prices on fuel. Locals and app users, like you, report to GasBuddy when they see great, low gas prices so the app can let you know.

6. FieldAgent – pays you to do small tasks at local stores such as taking a picture of a display, checking the price of an item or scanning a barcode. They’ll have a list of jobs and you just pick the ones you want to do.

7. ReceiptHog – earn points for uploading pictures of your receipts, from any store, to the app. Redeem the points for cash or donation to a charity.

8. CheckPoints – earn points by doing fun tasks like scanning barcodes of name brand products when you shop, downloading new apps, taking surveys and more. Redeem your points for Amazon or Walmart gift cards or donate them to charity.

And while you’re at it, here’s another way to earn some pocket money.

There are apps that will pay you to review new apps on your phone. Just download, answer some questions and give your feedback. You get paid for each review. When you’re done you can simply uninstall the app so it’s not taking up space or data.


4 Ways A Budget Can Pay Off

download (85)What comes to mind when you think of creating a budget? For many people, even the thought of putting one together is unappealing. However, there’s another more positive way to look at budgeting that may surprise you. Budgeting can be a way to gain more control of your finances and empower you to do more of what you want to do in life. So while making a budget does require forethought and discipline-and may require you to reign in impulse purchases-it pays off by putting you in the driver’s seat. Over time, a budget has the power to:

1. Let you decide. When you allocate dollars as part of a budget, you give yourself a chance to be thoughtful about where your money is going and to make adjustments, if needed. For example, if you are shocked by how much you’re spending dining out or buying new clothes, you can curtail spending in those areas. Ultimately, knowing your spending patterns gives you the power to put your dollars toward the things that mean the most to you, and help you reach your long-term goals.

2. Take the pain out of daily decisions. Daily temptations to overspend become easier to navigate when you have a framework and guidance in black and white. Setting a budget equips you with the power to say “yes” or “no” to a purchase without guilt. You’ll be able to see what’s within your price range and get a clear view of how each purchase will impact your savings plan. The more specific your budget is, the better.

3. Make it easier to see the value of every dollar. When you’re cavalier about your spending, you’re discounting the effort it takes to earn money. In contrast, when you consider everything that goes into earning a paycheck, and the expenses you’re incurring for your home, food, clothing, entertainment and so on, you’ll have a clearer picture of your daily financial life. It’s also important to consider the potential long-term benefits of investing some of your hard-earned savings. It’s likely this will you’ll bolster your resolve even more.

4. Help you make larger financial goals possible. Large purchases can seem out of reach when you’re not tracking your spending patterns. Creating a budget gives you a roadmap to follow, making it clear what trade-offs are possible if you’d like to reach your goal sooner.

No matter what your net worth is, a budget can be a useful tool to help you be a good steward of your finances. Your financial advisor can help you examine your spending and recommend investment strategies to keep you on track with your financial goals.