Frequently Asked Questions
Q : Who needs to make a budget?
A : If you have ever had a need to make your money stretch a little longer, or if you’ve wanted to purchase something you know you could afford, but can’t seem to find the money to buy it, then it is time for you to make a budget.
All of us, at one time or another, will have a need to make a budget. If properly followed, this budget will eventually work to make our money buy what we need, when we need it.
Q : Why do I need to make a budget?
A : Budgeting, or the process of making and implementing a budget, forces us into making rational spending patterns which brings us closer to financial discipline.
Q : What is a cash flow problem?
A :It is a situation where the spending comes first before the earning. It presupposes that money will be coming in, but that expense items have to be paid before it arrives. Hence, the flow of cash is the problem, not the lack of it.
Q : What happens when I spend more than I earn?
A : That is a form of deficit spending, and it results in a negative imbalance. If the situation extends for the longer term, then it will either eat up into your savings, or eventually result in debt.
Q : I don’t know anything about budgeting. Are there software programs that can help me do it?
A : Over the years, with more and more people realizing the need to properly budget their financial resources, the software companies have responded by developing more and more products to address that need. The range is quite broad. From something to help you with personal budgeting, to a full blown program that can handle the requirements of medium sized companies. Choose something that will approximate your requirements for the next year or two.
Q : My luxuries are just small items. Why do I have to give them up?
A : Repetitive small expense items tend to build up over time. The midday cappuccino will add up to quite a sum at the end of the month. Analyze what it is about your small luxuries that you really want. Is it the coffee, or the drinking experience in that new corner cafe that you crave for? Substitution or reduction of frequency is often the key.
Q : I am good at keeping track of my expenses through a worksheet. What other advantage does using a budgeting software have for me?
A : The good budgeting software, aside from just listing down your expenses, can offer automated tabulation of items on demand. With just a few keystrokes, the software can call up information that may otherwise take longer if done manually.
Aside from recalling and tabulating data, software may also be taught to project or forecast future spending based on past spending patterns.
All in all, the use of software automates the data recording, processing, and retrieval process which makes everything faster and more reliable. It also allows subsequent readjustments without having to manually correct every item in the worksheet.
Q : How will I know if my budget works?
A : One of the better indications of a successful budget is when you have most of what you need at the time you need it. It means that your budget is already starting to work for you.