What Do Rich People Have That The Poor Does Not Have Apart From Money? The rich has money which the poor does not have but aside that, there are other urbane possessions of the rich that the poor don't have and I will just write on10 of such. The rich has money because they have learnt how to make money flow to them effortlessly but the poor would never know or do that These other urbane possessions of the rich include: 1. Wealth Mindset The rich has learnt that his mindset is everything and thus he guards jealously never allowing weeds and negative thoughts to live therein and making every effort to avoid the victim mentality. But the poor has accepted his condition as his fate and thus makes no efforts to extricate himself from the poverty pool. 2. Personal and Financial Discipline The rich has taught himself both physical and financial discipline. He does not speak out of tune, he has a cultured mannerism, is often courteous and humble. He also spends his mon
The Main Methods In
Budgeting
Incremental,
activity-based, value proposition, and zero-based budgets are the most common
types of budgets used by businesses.
Each of these four budgeting methods has its own set of advantages and disadvantages, which will be discussed more in this article.
1. Creating a step-by-step budget
Incremental budgeting takes the actual data from the previous year and adds or subtracts a percentage to get the current year's budget.
It is the most popular budgeting approach since it is simple and straightforward. Incremental budgeting is the ideal approach if the primary expense drivers do not change from year to year.
However, there are a few disadvantages to using the method:
- Inefficiencies are likely to persist. For example, if a manager knows that he can increase his budget by 10% every year, he will simply take advantage of the opportunity to increase his budget rather than looking for methods to cut costs or save money.
- It will almost certainly result in budgetary slack. For instance,
a manager may exaggerate the size of the budget that the team actually needs,
giving the impression that the team is consistently under budget.
- It is also likely to overlook external activity and performance
drivers.
Certain input costs, for example, have risen by a large amount. Incremental budgeting ignores any external factors and assumes, for example, that costs will climb by 10% this year.
2. Creating a budget based on activities
Activity-based budgeting is a top-down budgeting strategy that determines the amount of inputs required to support the company's goals or outputs.
A Company might set a revenue goal of $100 million, for example. The company must first specify the actions that must be taken in order to meet the sales goal, and then assess the expenses connected with these activities.
3. Setting aside funds for value propositions
When budgeting for value propositions, the budgeter considers the following questions:
What is the point of
putting this money into the budget?
- Is the item useful to customers, employees, or other parties
involved?
- Is the item's value higher than its price? - Is there any reason to justify the
expenditure if not?
Value proposition budgeting is essentially a means of thinking about ensuring that everything in the budget brings value to the organization. Value proposition budgeting aims to remove needless costs, albeit it is not as precise as our ultimate budgeting choice, zero-based budgeting.
4. Using a zero-based budgeting approach
One of the most popular budgeting approaches, zero-based budgeting, assumes that all department budgets are zero and must be rebuilt from the ground up. All expenses must be justified by managers. There are no expenditures that are automatically "okayed." The purpose of zero-based budgeting is to eliminate all expenses that aren't considered absolutely necessary for the company's success (profitability).
Bottom-up budgeting can be
a very effective way to "shake things up."
The zero-based method is an excellent alternative when there is an immediate need for cost savings, such as when a company is going through financial reorganization or a major economic or market downturn that forces it to dramatically reduce its budget.
Instead of managing
discretionary costs, zero-based budgeting is suitable for managing
non-essential running costs. However, because it is a time-consuming method,
many companies only apply it occasionally.
Levels of Budgeting Participation
We want buy-in and acceptance from the entire company during the budgeting process, but we also want a well-defined budget that cannot be manipulated.
When it comes to goal congruence and involvement, there is always a trade-off. With all types of budgets, the three themes listed below must be taken into account.
Budgeting that has been imposed
Imposed budgeting is a top-down procedure in which executives stick to a company target they define. Managers stick to the goals and set activity and expense budget targets. If a company is in a turnaround situation and needs to reach certain difficult targets, it can be beneficial. However, there may be little goal congruence.
Budgeting that was negotiated
Negotiated budgeting is a hybrid of top-down and bottom-up approaches to budgeting.
Executives may establish some of the goals they want to achieve, but budget planning is a collaborative duty between managers and staff. Lower-level employees' increased involvement in the budgeting process may make it simpler to stick to budget targets since they feel like they have a more personal stake in the budget plan's success.
Budgeting by consensus
Participative budgeting is a top-down strategy in which employees recommend targets to executives from the bottom up.
The CEOs may offer some suggestions, but they largely follow the advice of department managers and other staff (within reason, of course). Operations are handled as self-contained subsidiaries with considerable budgetary autonomy.
In the end, a balanced budget that can achieve the target goals should be the way to go in ensuring that Companies and even persons manage their finances appropriately.
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At Wealth Is Earned Blog, we believe that being wealthy is a choice just as being poor irrespective of the circumstance and situation and it all streams from the mindset. Throw 2 men into the same gutter, the one with the wealth mindset will make it to the top while the one with the poverty mindset would be there and groveling with other inhabitants of the gutter - it is a mindset thing. God has given you the POWER to make wealth, it is your ABILITY to APPROPRATE what God has given you that makes the difference and it is wholly and entirely dependent on you
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1. The Incremental Budgeting appeals to me most because of the following reasons:
ReplyDelete* It is the most popular budgeting approach.
*It is simple and
*It is straightforward.
2.The Combination of Incremental method and Negotiated approach appeal to me because they are a collaborative duty between managers and staff.
Success is guaranteed to an extent since everyone feels they haveave a more personal stake in the budget plan's success.
3. 5 Advantages of budgeting are:
*Minimixes waste.
*Guarantees Progress.
* Builds Wealth.
*Removes Confusion
*Saves Time.
MINIMIXES WASTE;
Budgeting helps to minimize or absolutely removes waste in the sense that incomes and expenditures are known and everything is accounted for.
GUARANTEES PROGRESS;
Budgeting guarantees Progress since waste is eliminated.
BUILDS WEALTH;
Budgeting equally makes it possible and easier to build wealth by consistent benefits of waste elimination.
REMOVES CONFUSION;
Budgeting removes Confusion in planning as it helps for efficient use of resources available.
SAVES TIME;
Budgeting saves unnecessary waste of time and limited resources. res
Zero based Budget. In zero based budgeting, every money has value and is expended on everything thereby taking away room for frivolous expenses. It gives room to always start afresh and from the ground point. It's appeasing to me from the last time I had about it amongst others.
ReplyDeleteZero based Budget and budget by consensus. When a CEO has a decision to take and it must be dependant on the opinions of the top personnels who are rooted deeply into the fabrics of the organization, methinks, it's a wonderful one when this model is syncronized with zero budgeting. When this whole ideas are brought from all departments and knitted into zero budgeting, that will be fantastic from my perspective.
a).Manage your money efficiently- a budgetless life is like a wayward life. There can't be prudence in money management. Accountability is best achieved here.
b). Monitor performance- the best management setting is embedded here. Once an organization or a person knows where money made is going, that gives satisfaction..
c). Improve decision making-the basis of budget is for effective and efficient decision making. Knowing where to allot a particular money and at the appropriate time.
d). Plan for the future-to build WEALTH, which is transferable, budget is the foundation for it. Failing to plan is planning to fail.
e). Allocate appropriate resources for a project- step by step placement of resources using different systems becomes expedient whenever there is a holistic review of the budget. If one sticks to the monthly review of the budget, one can take a drastic decision that can effect a system to his best. Either pick the 10/20/20/50 which is my best.
Kelly
ReplyDelete1. The Zero-Based Budgeting method appeals to me most because: "All expenses must be justified by managers; there are no expenditures that are automatically okayed."
2. The Combination of Zero-Based and Negotiated approach appeals to me most because: it brings everyone in the organization to have a sense of belonging and unity of purpose towards driving for achievement of the budget; since they were all involved in the budgeting process. Also important is the reducing to the barest minimum any form of waste.
"Budget planning is a collaborative duty between managers and staff. Lower-level employees' increased involvement in the budgeting process may make it simpler to stick to budget targets since they feel like they have a more personal stake in the budget plan's success."
3. The 5 advantages of budgeting includes:
a. Ease of achieving set goals. Since budgets are developed to meet certain goals in the future, programmed adherence to the laid down budget enables one to achieve the set goals easily.
b. Eradication of wasteful or frivolous expenses: Since there is a programmed adherence to the laid down budget, wasteful and frivolous expenses are eliminated to the barest minimum.
c. Gives you total control: Budgeting gives you the control to be able to manage your wealth and watch it grow. As the one in control, it gives you the flexibility for adjustments in the event of deviations.
d. Monitoring or evaluation of progress: Because budgeting gives you total control, you're able to monitor your progress on one hand as well as evaluate the performances of the budget on the other.
e. Builds your wealth: Constant, continuous and consistent budgeting adherence brings about the building of ones wealth. This is because, there's bound to be a gradual positive progression in the accumulation of wealth.
HAVE A GREAT WEEK (WEALTH CREATORS) AND REMAIN BLESSED.
Morgan Oscar
ReplyDelete1. Zero-based budgeting method because it helps to eliminate unnecessary expenses.
2. I prefer a combination of the zero-based budgeting and budgeting that was negotiated, where everyone; managers, staff and even lower employees are involved, so that the budgeting process is easier and faster, also ensuring that the company sticks to the laid out budgeting target.
3. *To eliminate unnecessary expenses; so you account for and balance of every income and expenses.
* it helps to maintain financial goals and targets.
* since the income has been budgeted, discipline is applied in spending.
* with budgeting, over a period of time, wealth saved can be used to invest and also to generate wealth.
* with budgeting, one can easily become debt free since debt payments are part of the budget.
1.Zero- based budgeting appeals to me most,the reason is because is a method of budgeting in which all expenses are justified and approved for new for each new period. Since it starts from the scratch. At the beginning of every budget period, an analyzing needs and costs of every function within an organization and allocating funds accordingly, regardless of how much money has previously been budgeted to any given item.
ReplyDelete2.The combination of Zero based and negotiated budget appeals to me most because of its collective effort in ensuring unification of purpose of reaching to the targeted goal 'budget '.It also works so that no waste is tolerated and only what is needed is incurred.
3.Advantages of budgeting :
i.Budgeting provides you 100% control over your money. It will save you the grief of over spending and possibly cause you to climb into more debt, something you may of us struggle with:If you are not controlling your money, it is controlling you .It allows you to live forth far less stress without having to worry about those unexpected expenses that come up(way too often I might add).It always allows you to understand where you spending habits are weakest.
ii.Let's you track your financial goals.
Budgeting is helping you avoid spending on unnecessary fees,services, and products that are cutting into your financial goals.If you have a fixed income, budgeting allows you to make ends meet much easier each month without all the stress. Sit down and write your financial goals. Once you have written down on paper and you take control of your money, its much less likely not to meet them.
iii.Budgeting will open Your Eyes.
It allows you to know exactly where your money is coming from, where is being spent, and how much you have at the end of each month. This provides you with a completunderstanding of your financial goals. It also always you to adjust your spending habits in the right direction to reach your goals.
iv.Budgeting will help organize your spending
When starting to budget, start by breaking down all your expenses for the month such as cable, the internet, mortgage, insurance, groceries, entertainment, restaurant, gym membership,printing a budget template will help you stay organized. This makes it easy to quickly view exactly how much you are spending on individual services each month.
v.BudgetingHelps you Invest
Investing is great way to have your money work for you. Contributing to your retirement early and often should be on your radar so you can retire as planned. Some people use the rule of ' whatever is left at the end of the month I will Put in my retirement " This is backward thinking. Try changing your mindset to paying yourself first " Meaning knowing how much you need to put away for retirement and paying yourself before anything else. Obviously, this takes time to learn how to balance it correctly so all your bills still get paid but this is by far the best way to reach your investment/ saving goals.
Creating a budget based on activity : I really do not have a budget per say, but the most important thing I try to do is to watch, regulate and monitor some expenses that are made in the course of daily activity. Budget can only give you an idea of what the cost effect could be but will not do the job of financial management if you are not conscious enough.
ReplyDelete2. Setting aside funds for value proposition and creating budget based on activities can have a massive positive result when managed properly. When we set assume a particular amount for an item and the item end up increasing in prices, its actually going to affect the designated amount if not carefully managed. When we set aside some funds probably for things we didn't plan to, it will help to ease the pressure than comes when things are going unexpectedly.
3a. Plan efficiently
b. Financial intelligence
c. Reduce expenses
d. Save more money
e. Manage cash flow and cash outlet.
*No 1*
ReplyDeleteValue preposition; I am so much interested in adding values to virtually everything I do. However, budgeting is not an exception. That's why I feel that everything that is included in the budget must deliver value to my business and value preposition is all about this.
*No2.*
Budgeting by Consensus;
I prefer it because it is based on agreements. Where employees recommend targets from the bottom up. And it is self contained subsidiaries.
No3.
a. Management.
b. Good allocation.
c. Monitor performance.
d. Meet your objective.
e. Planning.
a. Management; It helps in management of money effectively.
b. Good Allocation; it helps in allocating appropriate resources to projects at head.
c. Monitor performance; budgeting is a very good tool in monitoring and tracking money. However, it checks it's performance also.
d. Meet your objective; Budgeting helps to set and meet objective for which it was set up for.
e. Planning; it secures the future, thereby a very good tool for planning for the future.