This website is under construction, and it will be finished sometime in August, 2009.
To date, it contains over 13,100 words a hyperlink table of contents, and many financial calculation devices, in the Online, Excel, and OpenOffice.org formats. The online format works directly from this website, and the Excel and OpenOffice.org versions can be downloaded.
●Section 1) Introduction●
●●The Purpose of This Website●●
The primary purpose of this website is to provide assistance with financial challenges and budgeting, for individuals and families. The website provides budgeting tools, and new perspectives, general information and referrals to help you obtain your goals and improve your financial situation. For those who have financial problems the goal is solutions, and for those who are doing well, the goal is to do even better. To help you achieve this, the website provides the following (all free of charge):
· In section 2 there are a number of online budget and balance sheet calculators that work directly from the Internet.
· Also in the second section there are several financial calculation devices in the Microsoft Excel and OpenOffice.org formats, which are provided as free downloads. These devices do more than calculate; they can help you keep permanent financial records.
· In addition, section 2 contains information on a number of financial topics, with a focus on the calculation devices.
· Additional information on budgeting and budget problems is presented in section 3. This includes a discussion on psychological aspects of budgeting problems.
· In section 4 there are a series of special questions, and related information, designed to stimulate your creative thinking and help you develop insight into money and budgeting.
· In section 5 there are links to other websites for additional information, and points of view on financial matters and budgeting.
· Also in the fifth section there are links to agencies that provide various types of financial assistance.
●●Information and Calculation Devices for Business●●
The calculation devices on this website are designed for individuals and families, but some of them can also be used for a business. However, if you need information and calculation devices for a business you should left click on the following link, which will take you to a website that is focused on the financial aspects of business: www.Tech-For-Text.com/Budget-B
Table of Contents Of This Website
The blue words in this table of contents are hyperlinks. Thus, to go to the text that you want to read, left click with the mouse on the corresponding blue words. Alternatively, you can scroll down, and browse for material that interests you.
●●A Note From The Author,
To The Readers Who live Outside Of The United States●●
I live in the
The calculators I created for this website have the US dollar sign ($), but they can be used with any currency. Whenever I use the word dollars, in this e-book, think of the currency used in your locality.
The search phrases, and links in section 5, are for
●Section 2) Financial Calculators●
●●The Software-Based Calculators on This Website●●
There are many types of financial calculators on this website, in the form of software. Some of these devices calculate a simple budget. A few of these devices perform calculations based on money and time (in terms of days and weeks). There are also devices that calculate your assets, liabilities and net worth. There are calculators to help you check bills from merchants, such as grocery bills. Some of these devices will provide an insightful view of how you spend your money.
The calculators are in three formats, which are listed below:
· Online Calculators that work directly from this website
· Calculators in the Excel format, which is a free download (Requires Microsoft Excel and Windows)
· Calculators in the OpenOffice.org format (Requires the free OpenOffice.org software package, and Windows.)
If you do not have Microsoft Excel on your computer, you should use the calculators that are in the OpenOffice.org format, because the required OpenOffice.org software packages free. This software is very high quality, and it has almost all of the functionality of Microsoft Office. You can download this software, and use it without charge at www.OpenOffice.org. If you left click on the above link it will take you to the website that provides the software. (This may save you a couple of hundred dollars, which is one of the goals of this website.)
If you do not have the Windows operating system on your computer, you can still use the online versions of the calculators. They will work with most computers and operating systems, as long as you have a modern browser.
Most of the calculators on this website are easy to use. You will probably master the calculators with a few minutes of trial and error learning. However, most of the calculators contain detailed instructions. Some of these instructions are written directly on the calculator, or underneath it, or on top of the device.
●●Look for Calculators that are Helpful for You●●
Your goal should be to experiment with most of the calculators, and choose a few that you find helpful, and want to use on a regular basis. Everyone has different needs, and what is useful for one person, maybe of little value to another.
All methods of calculation present a risk of error. This applies to calculations done with pencil and paper, handheld calculators, and software-based calculation devices, including the devices on this website. Thus, the user must always take the responsibility to evaluate the software for accuracy, as well as usability in relation to personal needs and skills.
In general, software-based calculation devices present the least risk of errors, when compared to other methods of performing calculations. However, errors are possible with software as a result of all of the following:
· Errors resulting from In accurate data entry
This type of error is very common and very significant, with all methods of calculation. However, when you are using software it is relatively easy to double check the data you entered, because numbers and words are usually retained by the software temporarily or permanently.
· Errors resulting from in proper use of the software
This is also fairly common. However, this usually does not cause calculation errors, because when software is incorrectly operated, the user is likely to be aware of this, and the software might not function at all.
· Errors from Malfunctioning software, bugs, viruses, etc.
This type of problem is unusual. However, you should always double check software for accuracy, as well as its utility, in relation to your needs and skills.
· Errors resulting from malfunctioning computer hardware
This type of problem is very unusual, but it has happened in some cases. Malfunctioning computer components usually cannot cause mathematical errors, because it often makes the computer unusable.
The online calculators are interesting, but they do not always provide the same practical utility as the Excel and OpenOffice.org versions. The online versions cannot save the numbers you enter and your calculated results. That is as soon as you leave the website, and close your web browser everything you entered will be lost. You can partly get around this by taking a screenshot of the calculator after you entered numbers and obtained your results. How to do this is explained below.
The following instructions apply to computers that are running Microsoft Windows. There are probably similar techniques that apply to other operating systems.
To take a screenshot of an online calculator, or anything else, carry out the following steps:
· Step 1 Press the F11 key This step is optional, but it temporarily removes the toolbars and other clutter on the top and bottom of the computer’s screen. After completing all of the following steps, you can return the screen to normal, by pressing the F11 key again.
· Step 2 Press the Print screen key. The print screen key is usually, on the left side of the keyboard near the scroll lock key. This takes a picture of everything that is on your computer screen.
· Step 3 Open a document from your Word processor software, such as Microsoft Word, Microsoft Works, WordPerfect, or whatever you have.
· Step 4 Left click with the mouse on the word processor document that you opened in step 3.
· Step 5 While holding down the Ctrl key, press the v key (Your finger must be pushing down on the Ctrl key when you press the v key.) This will paste a picture of the calculator in your word processor document.
· Step 6 Save your word processor document. To do this, enter a convenient file name for your document, and then hold down the Ctrl key, and press the s key.
The following is a good example of a screenshot of a calculator, with words, numbers, and calculated results. The screenshot looks identical to the actual calculator, but it is only a picture and it cannot perform calculations.
The above is a screenshot of a calculator, after data was entered.
With the calculation devices that are in the Microsoft Excel, or OpenOffice.Org formats, you can create a limitless number of calculation documents, and they can be saved as permanent records. This allows you to easily keep records of all your financial calculations. In addition, you can change the numbers in these records at any time, and the software will automatically recalculate the results.
However, you must always remember to use a different filename for each calculating document that you want to save. The most convenient filename is usually the date you started a budget, (or perform the calculations) such as Jan 1 2009, 1-1-09, or 1-1-2009. You cannot use the conventional format for a date as a filename, with Microsoft Windows, such as 1/1/09.
One of the simplest problems that most of us occasionally face is calculating how much a list of items cost. Sometimes, our bills, especially grocery bills, seeing suspiciously high, and we want to check the addition to see if there are any errors. At times we may want to make calculations before we make purchases to see if we have enough money available. We may want to check prices involving sales tax. Sometimes merchandise is sold at a percentage discount, and we may want to determine what the actual price is, or should be. For example, how much would an item cost if it normally sells for $100, and there is a 16% discount, as well as 7% sales tax.
The following list of calculators can solve all of the above problems for you. The simpler calculators are listed first, followed by the more complex devices.
●●●Calculators For Adding●●●
●●●The Shopper’s Calculator For Sales Tax, Percentage Discounts And Addition●●●
The following blue words are links. When you click on them they will open an online calculator, instructions, or activate a download of an Excel or OpenOffice.org calculation device.
(Note, when an online calculator opens it might not open at the very top, so remember to scroll up when you open an online calculator.)
One of the best calculation devices is the Budget-Date Calculator. It calculates the number of days and the amount of money you have for your budget. It does this based on the expiration date of your budget. The user sets the last day of the budget, (the end date) and the calculator provides daily feedback on the number of days and amount of money left in the budget. It also provides daily feedback on the maximum amount of money that can be spent per day, on the average, without going off your budget.
This Budget-Date Calculator comes in three versions, as presented below.
For instructions on how to use the Budget-Date Calculator left click on these words. These instructions apply to the three versions presented below, except the sections that deal with saving documents do not apply to the online version.
Under this heading there are four Daily Budget Calculators for 7 days, 14 days, one month, and 65 days. One of the primary purposes of these calculators is to make you more aware of daily expenses, and unnecessary purchases.
Most of us, at one time or another, purchased goods or services that we really did not need. For some individuals this is an ongoing problem, and it may involve impulse buying. Items purchased on impulse, might be inexpensive, but they can add up to a sizable sum of money at the end of the month. Some of these items are also quite unhealthy. Some typical examples of unnecessary purchases are eating in restaurants that you cannot afford, consuming unhealthy junk food, cigarette smoking, drinking alcoholic beverages, and buying unneeded items because they were on sale.
Of course, what is unnecessary for one individual, maybe essential, or a major source of pleasure for another, and thus the concept (of an unnecessary purchase) is a relative one. The Daily Budget Calculators can help you decide what an unnecessary expenditure is FOR YOU. These calculators provide a place to list daily expenses, and they provide daily feedback on the amount of money you have been spending per day, and the amount of money you have spent since the start of your budget.
You can periodically examine the resulting records from these budget calculators. This can be very insightful, when you see how much money you have been spending on unnecessary items. This should help you make a list of purchases that you want to reduce or stop entirely.
The records created by the calculators, are also useful in charting your progress. You can see if the number of your unnecessary or unhealthy purchases are going down, remaining the same, or getting worse.
Links to the specialized budget calculators, designed to make you aware of your daily expenses, and unnecessary purchases are listed below:
For an Online version of a 7 Day Budget Calculator left click on these words. Note: the online version is primarily for demonstration purposes. It cannot save the data you entered, unless you print your work or take a screenshot of the calculator. This can be inconvenient to do on a daily basis. Thus, you should use the Excel or OpenOffice.org versions for a practical budget.
For a One-Month Budget Calculator, in the Excel format left click on these words. (This software calculates a budget that expires after the last day of the month, no matter when you start your budget.)
For a One-Month Budget Calculator in the OpenOffice.org format left click here. (This software calculates a budget that expires after the last day of the month, no matter when you start your budget.)
●●● Introduction and background information ●●●
This subsection is primarily focused on planning a budget using specially designed budget calculation devices that calculate correction factors. To optimally present this material it is necessary to present some interesting background information first, about budgets and related concepts.
●●● Three Budget Methods ●●●
In this subsection three budget methods (or strategies) will be presented, which I am calling intuitive budgeting, feedback correction budgeting, and a planned budget. These strategies can be used independently of each other, or in combination.
Note: I created the above terminology to explain the concepts in the following paragraphs.
●●● Intuitive Budgeting ●●●
Intuitive budgeting is a method that involves intuition, common sense, and estimations. Most of us use this method in various forms. Intuitive budgeting essentially involves estimating available funds and the cost of necessities, and other potential and actual purchases. This is done on an ongoing basis, such as daily, or every time a purchase is contemplated. The arithmetic involved is usually carried out in the mind, in terms of rough estimations. This is generally coupled with a more precise examination of funds periodically, such as counting available cash, or examining the funds in a checking account. The user of this method will generally adjust his or her expenditures based on the estimated or actual availability of funds.
Intuitive budgeting is a good method if it works for you. It consumes very little time, and it is relatively easy. Intuitive budgeting is likely to be most useful for people that have significantly more funds than expenses, or relatively few expenses, and adequate funds. However, this budgeting method can be problematic for some people, and it can lead to financial problems. This is likely to happen when the individual's estimates are influenced by emotional states, when the income is barely adequate to cover expenses, and/or when credit cards are used excessively.
●●● Feedback Correction Budgeting ●●●
Feedback Correction Budgeting involves entering income and expenses, into a budget calculation device, throughout the budget period. The user periodically checks the figures to assess the availability of funds, and adjusts his or her expenditures accordingly. This essentially involves a feedback and correction process, with the goal of maintaining a balanced budget, so that the available funds will cover all expenses.
Feedback Correction Budgeting is a more precise method than the Intuitive budgeting discussed above. Feedback Correction Budgeting offers some margin of financial safety, and the user of this method is likely to be aware of money shortages, before the problem becomes severe. However, the planned budget, discussed below, offers an even greater margin of financial safety.
●●● A Planned Budget ●●●
A planned budget involves precise calculating and/or estimating of income and expenses before the budget starts. A planned budget can be divided into two steps, which are planning the budget, and carrying out the budget according to plans.
The planning stage takes place before the budget starts, and it involves assessing the quantity of income and expenses for the upcoming budget period. Some of this may involve precise calculations, but usually expenses and sometimes even income, must be partly or totally estimated.
A planned budget provides the opportunity to make adjustments in the budget before it starts. For example, if during the budget planning stage, it becomes apparent that income is not adequate to meet the expenses, the budget can be modified before the budget is started, such as by postponing nonessential purchases, and/or by obtaining additional funds, and then recalculating to see if the budget is balanced.
The above is the first step of a planned budget. The second step involves starting the budget, and carrying it out according to plans. This involves entering the actual income you obtain, and your actual expenditures, into a budget calculation device during the budget period.
●●● Two Challenges Of The Planned Budget Method ●●●
The planned budget method requires the ability to assess and estimate income and expenses, with a reasonable degree of accuracy. Another challenge is sticking to the budget plans, when the budget is actually carried out. All of this can be improved with practice and trial and error learning. The specially designed budget calculators, discussed below, can reinforce this practice and learning.
●●● Your Ability to Plan and Carry Out a Budget Can Be Calculated, In Terms of a Correction Factor ●●●
The ability to plan a realistic budget and successfully carry it out can be calculated with the specially designed budget calculators presented at the end of this subsection. These calculators compare your actual budget (the way you actually spent your money) with your planned budget and calculate a correction factor. A correction factor of 1 or 100% means you planned and carried out your budget perfectly. A correction factor that is greater than 1 means you underestimated. Underestimating income might not be problematic, but underestimating expenses can sometimes lead to significant financial problems. When the correction factor is less than 1, it means you overestimated. Overestimating expenses will probably not be very problematic in most cases. However, an overestimate of income might lead to financial difficulties, especially if it encourages additional expenditures.
●●● In precise mathematical terms what is a correction factor? ●●●
Note: the following mathematical principles are carried out automatically by the calculation devices provided at the end of this subsection. Thus, if you do not understand this material, or are not interested in it, you can skip it.
As the term is used in this text, a correction factor is a mathematical definition. It is a factor that will correct an inaccurate number, such as an inaccurate estimate, measurement, or calculation, by multiplication. That is if an inaccurate number is multiplied by an appropriate correction factor, the result will be accurate. In mathematical notation this is as follows:
E = an inaccurate estimate, measurement, calculation, (or any inaccurate number)
C = correction factor
A= accurate result
Then CE=A. This equation is true by definition.
It is obvious, with simple algebraic manipulation that a correction factor is equal to the accurate result divided by the inaccurate number. This is a theorem. In mathematical notation this is as follows:
Let us apply the above ideas to a planned budget.
A= the total actual expenses calculated after the budget period has expired.
E= our estimated expenses, calculated before the budget period started.
Thus, the correction factor for expenses, for planned budget, is the total actual expenses divided by the estimated or planned expenses.
The same idea applies to income. (Income means here any money that was planned or allotted for the budget.) That is the correction factor for income is the total income received, divided by the estimate of total income that was made before it was received, or apply to the budget.
●●● A Simpler and Less Technical Explanation of Correction Factors then the Above ●●●
This discussion is simpler than the above discussion of correction factors, and it does not require any knowledge of formal mathematics.
With the correction factor calculators, if you estimate inaccurately, correction factors are calculated that can be used to correct the estimate. This involves, multiplying the estimate by the appropriate correction factor, which will result in a perfectly accurate estimate. This might sound somewhat mysterious to some people. However, when you examine the simple mathematics, which is carried out by the calculator, it will probably seem obvious.
For example, if your estimate for expenses was $3000, but after the budget period was completed, you found that you actually spend $6000, then your correction factor for expenses would be 2, ($6000/$3000=2). If you multiply your inaccurate estimation of $3000 for expenses, by the correction factor, 2, you would obtain $6000, which was the actual expense with this example.
Obviously, there is no way to obtain a precise correction factor, until a budget period has expired, and you complete all the calculations for expenses and income. However, if you constantly find that your estimations are off by approximately the same amount, you can apply the correction factor calculated from previous budgets to the budget that you are planning.
Some of the calculation devices in this subsection have an input box to enter a correction factor to compensate for less-than-perfect estimations of expenses and income. This is useful only if you have an estimate of an appropriate correction factor, which ideally can be obtained from previous budgets. The following paragraph provides some additional suggestions in this regard.
●●● People, Organizations and Governments Often Underestimate Expenses, and Sometimes Overestimate Revenue ●●●
People, organizations and governments tend to be overoptimistic with finances. They frequently underestimate expenses, and they may also overestimate revenue. It is not unusual to have estimation errors that range from 25 to 50% if not more. This often results the need to borrow money, which may result in substantial accumulation of debt, and financial problems.
The above raises the question, what causes the over optimistic estimations? There are probably many contributing factors including the following:
1) It is difficult to anticipate all of the hundreds or thousands of expenses that we may be faced with throughout a budget period. Attempting to figure every expense can be very time-consuming.
2) The availability of the many types of credit can reduce awareness of financial problems, and it might temporarily reduce the necessity to precisely figure every expense.
3) It is difficult or impossible to anticipate all the unforeseen outcomes that have a financial impact. For example, accidents, illness, loss of employment, natural disasters, wars, and problems with the economy, cannot always be predicted, and can result in additional expenditures, and/or lack of funds.
4) Many people are brought up with the idea of positive thinking, which can result in financial problems, if it is not coupled realistic assessments of reality.
5) In the case of organizations and governments, under estimating expenses, or overestimating revenue, can sometimes be a political strategy. This can involve underestimating the cost of a major project, and after it is half completed requesting more money. This can happen inadvertently as well as intentionally. Companies that want to get a contract, can make overoptimistic assessments of their ability to fulfill a contract at a given price.
There are a number of ways to deal with the overoptimistic financial assessment tendency described in the following paragraphs.
An awareness of all of five difficulties presented in the above list, coupled with careful evaluations of overall circumstances, can reduce or eliminate financial problems stemming from underestimating expenses, or overestimating funds.
Overoptimistic financial assessments can also be dealt with by estimating a correction factor, or using correction factors calculated from previous budgets. This can be done by downloading one of the budget calculators with input boxes for correction factors. Then you should change the correction factor in the input box for expenses from 1 to at least 1.25. If you know from experience that your estimations are off by 150 to 200%, you should use correction factors of 1.50 or 2.
If you are dealing with an irregular source of income, such as business profits you can neutralize any overoptimistic estimates, with a correction factor that is less than 1. A good correction factor to start with for income might be 0.75. With experience, and trial and error learning, you will probably be able to determine the best correction factors for your budgets.
There are additional methods that will be helpful for all types of budgeting problems in the following paragraphs.
●●● Methods to Improve a Planned Budget, and Budgeting in General ●●●
The planned budgets and the correction factor calculators can be quite helpful. However, in most cases you will find at least some discrepancy between your budget plans, and the way you actually spend your money. Thus, combining other budgeting techniques with a planned budget, can improve its functionality. Some of the most useful methods of improving a planned budget are presented below.
●●● Allocate money for miscellaneous expenses ●●●
One of the simplest ways to improve a planned budget, or a budget of any kind, is to enter the words miscellaneous expenses into the budget calculator, and allocate related Funds. In some cases, entering multiple categories of miscellaneous expenses might be an even better approach, such as miscellaneous medical bills, miscellaneous entertainment expenses, miscellaneous repair bills, etc. The money allocated for the miscellaneous expenses, should be sufficient to act as a safety margin for underestimated or unforeseen expenses.
For most people the miscellaneous expenses should probably be at least 10% of all the expenses, or perhaps 10% of the income. In some cases, the percentage should be significantly higher. A history of many unplanned purchases, and unexpected expenses would suggest the need for a high percentage.
If the money allocated for miscellaneous expenditures is not consumed, it can be used for future budgets, or placed in a savings account.
●●● Feedback Correction Budgeting Method
The feedback and correction method was discussed above, and it can be applied to a planned budget. Of course, if the budget was perfectly planned before it was started there would be nothing to correct. However this is usually not the case. Thus, when you start a planned budget, you should frequently check your budget calculator to determine the availability of funds, and see if your expenditures are proceeding as planned. With this information, you should adjust your expenditures accordingly.
●●● Delay purchases that are not on your budget, for the following budget period ●●●
Whenever feasible, postpone unplanned purchases, for the following budget. This will allow you to enter the potential purchase into the new budget, if there is enough funds. This delaying tactic prevents impulse buying, and it gives you time to evaluate and determine if you really need the product.
●●● Budget Calculators, With Correction Factors functions, to Plan and Carry Out a Budget●●●
One paragraphs below, there are download links for the special budget calculators discussed in the preceding paragraphs. Note these calculators have two sections, which I will call the PLANNING SECTION, and the ACTUAL SECTION. The PLANNING SECTION is for planning your budget, and carrying out related calculations, such as anticipated income, and expenses that will come to during the budget period. The ACTUAL SECTION is used during the budget period, as defined by the start date and end date you enter. In the ACTUAL SECTION, you enter actual income you have received, and the actual expenses that you have paid, or expenses that you will pay before the end date of the budget. The ACTUAL SECTION should be updated on a daily basis, or whenever you spend money or obtain funds that will be put into the budget. However, the PLANNED SECTION should not be changed once the budget period has started.
If you want a large budget calculator that can handle up to 112 expenses, with correction factors, in the Excel format, left click on these words. This budget calculator is the Basic Correction Factor Budget Calculator-112, and it is similar to the above, except it is large enough for a business or small organization.
If you want a budget calculation device, in the Excel format, that calculates correction factors, left click on these words (Prediction Budget Calculator). Note, this calculator does not have input boxes for correction factors.
This website has a number of balance sheet calculators, but before I present them, I want to explain some useful concepts and the limitations of balance sheets. Under this heading, I am providing information, and under the following heading, I provide the links to the balance sheet calculators.
Balance sheets are used in business to calculate assets, liabilities, and owner’s equity. The total assets minus the total liabilities, is equal to owner's equity. In simple language this means: the dollar value of everything that is owned (including real estate, motor vehicles, cash, bank accounts,) minus all the money that is owed to banks, credit card companies, and anyone else, is equal to owner's equity. The owner's equity is the money that would be left over, if all the property was sold to pay off the debts. (In actual practice, the money obtained from property that is sold in this way, maybe less than the value estimated on the balance sheet.)
The balance sheet is often called a financial picture of the business, but it can also be used to provide an image of your personal financial situation.
That is the concept of a balance sheet can be applied to the financial situation of an individual or family. In fact, a bank might calculate your owner's equity in terms of property that you own, such as your house, or other real estate. This is done if you want to borrow money, and use your property as collateral. However, even if you do not have any significant financial assets, you still might be able to get a loan. The bank will consider your credit rating, and how much money you are earning, not just figures on a balance sheet.
There are many people that are very heavily in debt, and have little or no assets, but they are really in good financial shape, if they are earning enough money to easily meet their monthly expenses. For example, some students after graduating from college have over $25,000 in student loans to pay off, and they have little or no financial assets. There situation would look very discouraging on a balance sheet. They would have a negative net worth. However, if the college graduate obtains reasonable employment, there will be no problem in meeting expenses for necessities, some luxuries, and the monthly loan payments.
Just the opposite of the above can also be true. An individual can have several hundred thousand dollars in assets, practically no debt, and look great on a balance sheet initially but they can still be in serious financial trouble. This can happen if they do not have enough money coming in to pay their expenses over a period of months. Real life examples of this type are relatively common. They often involve individuals that were doing well financially, but they lost their job, and they were unable to obtain new employment quickly enough to avoid financial disaster. Problems of this nature can also involve illnesses that prevent reemployment. This can result in the loss of all the assets that the individual accumulated, in less than one year, including savings, stock, bonds, and the house they live in.
In spite of the limitations of a balance sheet, working towards a healthy financial situation, with a favorable balance sheet, with many assets, and few liabilities can be a very favorable objective. When this is done successfully, your balance sheet will improve year-by-year, and it will show an accumulation of wealth. A balance sheet of this nature can provide financial security, social prestige, and it may help you obtain loans to buy a house, and to start a business.
A balance sheet that reveals an unfavorable financial situation can also have very practical utility. It can help someone qualify for various types of financial assistance from the government. It can also be helpful in situations that require Bankruptcy.
The use of a simple balance sheet does provide some useful information. However, in many situations you can obtain a more practical financial assessment by evaluating what will happen over a period of months. That is instead of calculating all of your liabilities, and assets, calculate your liabilities and available funds for several months or one year. For example, let us assume that you will have over the next 12 months, bills totaling $36,000, to pay debts and for Living expenses. This is your liabilities for the next 12 months. The next step is to calculate your assets for the next 12 months. However, you do not want to include everything that you own. For example, you would not want to include your house and car, unless you were planning to sell these items to pay your bills. Your assets for the next 12 months would include your income, and any other funds that you have available to pay your expenses. If these assets exceed the $36,000 in liabilities, you are in good financial shape, at least for the next 12 months. This would be true even if your financial situation did not look good on a balance sheet, and your total liabilities greatly exceeded your total assets.
In general, it is necessary to use any type of financial assessment, including conventional balance sheets, and the methods suggested above, intelligently. This means common sense must be applied to obtain an accurate financial picture.
Using a balance sheet based on the assets and liabilities for several months to one year, as suggested above, can sometimes provide a more accurate picture, then other assessment methods. This is similar to the cash flow concept, and it is based on predictions, such as maintaining employment, which may involve much uncertainty.
Cash flow and financial uncertainty are very important topics, and they will be discussed in detail under separate headings.
The balance sheet calculators on this website are provided in three formats, which are online, Excel, and OpenOffice.org. The complexity and utility of these calculators vary. The simpler balance sheet calculators closely resemble some of the budget calculators, except the wording for the input fields are different. Hyperlinks for the simpler devices are presented first, which are followed by links for the more complex calculators.
There is little difference between a Balance Sheet and a budget calculator. The difference is primarily in the wording, and the way the balance sheet and budget calculators I used. The calculators presented under this heading, (Balance-Sheet-Budget calculators) can be thought of as a hybrid of the bounce sheet and a budget. The Balance-Sheet-Budget calculator can be used to calculate a balance sheet or a budget. However, it is primarily designed for calculating a balance sheet for several months to a year, or longer. As explained above, a conventional balance sheet does not always give the most accurate and useful financial picture. The Balance-Sheet-Budget calculators, calculate what will happen (or probably happen) over a period of weeks, months, or years. Links to the Balance-Sheet-Budget calculators are presented below.
For all three of the above (Excel, OpenOffice.org, and Excel with database), in a single folder, left click on these words. This requires Microsoft Excel 2003 or later.
●●Rate Multiplied By Time, Is A Very Useful Mathematical Concept, For Evaluating Budgets And Financials Stability●●
In this section, and the one that follows, a number of useful concepts for budgeting and finance will be discussed in detail involving RATE OF: income, expenses, gains and losses. After this material is presented, calculation devices that perform these mathematical functions will be provided on this website.
An understanding of the basic principles of rate and time will help you see budgeting, financial challenges, and goals in a new way. This new insight may help you find better methods and solutions to deal with your financial situation. This is the primary goal for this section.
Rate is a concept that is used in science and engineering, but it is also commonly used in our daily lives. When we are driving a car, we controlled the rate of speed of the car, such as 30 mph. Many of us get paid by rate per hour, such as $25 per hour. Some of us get a fixed salary based on the rate per week, per month, or per year, such as $500 per week, $$3000 per month, $36,000 per year.
From the above, the concept of rate will seem simple and obvious to most of us. Now we can advance the concept by considering rate and time. Some common everyday examples will make this easy to understand. When dealing with a moving object, such as a car, rate multiplied by time equals distance. For example, if a car is going 50 miles an hour in four hours it will be 200 miles from its original starting point. That is 50 mph multiplied by 4 hours equals 200 miles. When dealing with wages, rate multiplied by time, equals a sum of money. For example, if you get paid $20 per hour, and you work 10 hours, you earned $200. That is $20 per hour multiplied by 10 hours equals $200.
When dealing with budgets, and evaluations of financial stability, we can consider the rate of income, such as $500 per week. Some people get paid monthly, such as $3000 per month. This is their rate of income. For some people, it is necessary to consider the average rate of income, because they do not get the same amount of money each week, or each month. This is usually the case for people that own their own business, and individuals that work on a commission basis.
We can also apply the concept of rate to expenses. For example, if you spend $400 each week, your rate of expenses is $400 per week. If you spend $2000 each month, your rate of expenses would be $2000 per month. When dealing with the rate of expenses it is usually necessary to consider the average rate, because expenses almost always very each month.
However, most of us have fixed expenses that usually do not change each week or each month, such as rent, mortgage and insurance. Fixed expenses, involve a fixed rate of expenditures, per week, or per month.
There are also variable expenses that tend to vary each week or each month. For example, most of us do not use the exact same amount of electricity each month, so our electric bills vary. The same applies to food, clothing, and transportation costs. With variable expenses it is always necessary to consider an average rate of expenditures. When variable expenses are calculated together with fixed expenses, it is also necessary to think in terms of averages.
When evaluating financial stability, we can apply three concepts, which are rate of income, rate of expenses, and rate of gain or loss. The first two concepts were explained above.
What is the rate of gain or loss? It is your rate of income, minus your rate of expenses. For example, if your income is $3000 per month, and your rate of expenses is $2500 per month, your rate of gain is $500 per month.
When your rate of income is more than your rate of expenses, you have a rate of gain, such as with the above example. However, if you have a rate of expenses that is greater than your rate of income, you will have a rate of loss. For example, if your salary is $3000 per month, and your average rate of expenses is $3100 per month, your average rate of loss will be $100 per month.
There are a number of ways that cash flow is defined. For this discussion, it will be defined in a precise mathematical way, in terms of rate. Based on this perspective, cash flow is the rate that you get money, and the rate that you spend it. In more general terms, it is the rate that money enters and leaves a system. The system can be your pocketbook, the family budget, or the funds from a business.
From the perspective of rate, cash flow can also be thought of as the rate of income minus the rate of expenses. When the rate of income is greater than the rate of expenses the cash flow can be defined as positive, because more money is flowing in than out. When the rate of income is less than the rate of expenses the cash flow is negative, because more money is flowing out than in. When income and expenses are equal the cash flow is at equilibrium, because the same amount of money that flows in flows out.
People often talk about cash flow problems, especially in business, but the concept applies equally to individuals and families. What is often meant by a cash flow problem are situations where the yearly income is adequate to meet the yearly debts, but variations in the rate of income and/or expenses per month, results in a shortage of funds during certain months. In more technical terms, this problem consists of a cash flow that is in equilibrium on the average, but it fluctuates from a negative to a positive cash flow, over a specific period of time, such as one year. This type of problem is usually not serious because the expenses can ultimately be met. The solution can involve appropriate types of short-term credit.
In some cases, a cash flow problem is based on time periods less than a year, such as monthly, biweekly, or even weekly. Some people that get paid monthly, run short on money at the end of the month, but their average monthly income is adequate to meet their expenses. This problem can also happen to people that get paid biweekly or weekly, but the difficulty may be less severe, because of the shorter time periods involved.
Sometimes people confuse consistent or chronic shortage of funds, with the type of cash flow problem discussed above. This type of difficulty involves expenses that exceed the yearly income. It can be called a negative cash flow problem. This type of problem cannot be solved by obtaining short-term credit. In fact, credit might make the problem worse, because there may not be enough funds to pay back the money. The solution must involve a reduction in expenses and/or an increase in income.
Rate, as discussed above, is not very often applied to money, in spite of its utility. However, the concept of rate is commonly used to calculate the return on an investment. An example is a bank account has an annual rate of return of 5%. It is also used to calculate interest on debts, such as bank loans and credit cards. This is usually called the rate of return, or rate of interest, and it based on the percentage of the money per unit of time. For example, a savings account with $100, at an interest rate of 5%, would result in five dollars of interest in one year. However, the concept is a little more complicated here, because there is interest on the interest. With the above example, of $100, the rate of return for the first year would be 5% to 100, and the second year it would be 5% of $105, and the third year it would be 5% of $110.25, etc.
●● Rate of Income, Rate of Expenses, and Rate of Gain or Loss, Summarized from a Mathematical Perspective ●●
Summarizing the concepts discussed above in terms of mathematical formulas, coupled with verbal examples, should provide some additional insight about these ideas, especially for those who are mathematically inclined.
If you find the following summary interesting or helpful, study it, but if you find it confusing, skip it. If you have a basic understanding of rate of income, rate of expenses, and rate of gain or loss, that is all you really need, because calculation devices will be presented in the next section, to perform these calculations automatically.
The following symbols will be used for the formulas that follow.
RI= Rate of income
Re= Rate of expenses
RL = rate of loss (this is the rate of accumulation of debts)
$I=Money gained (money that is not consumed by expenses)
$e= Money consumed (money lost or money used for expenses)
Note, the asterisk (*) will be used in some of the following examples to represent multiplication.
RIT=$I In words, this means: Rate of income multiplied by time, equals a sum of money. For example, if you earn $10 an hour, and you work 40 hours you will earn a total of $400. That is $10 per hour multiplied by 40 hours equals $400. In terms of the formula:
(RI=$10 per hour)*(T=40 hours)=($I=$400)
ReT=$e This means: rate of expenses multiplied by time equals total expenses. For example, if you spend on the average, $300 per week, your yearly expenses would be $15,600. That is $300 per week multiplied by 52 equals 15,600. In terms of the formula:
(Re=$300 per week)*( T=52weeks)=($e=$15,600)
Another example is if you spend $3 per day on cigarettes, by the end of the year, (based on a 365.25 day year) you will spend $1095.75. With the formula this is as follows:
(Re=$3 per day)*(T=365.25 days)=($e=$1095.75.)
When RI > Re then RI − Re=Rg In words this means: When the rate of income is greater than the rate of expenses: income, minus rate of expenses, equals rate of gain. For example, if your income is $ 2000 per month, and your expenses is $1900 a month, your rate of gain is $100 per month. With the formula this is:
(RI =$ 2000 per month)−(Re=$1900 a month) =(Rg=$100 per month)
If the rate of gain is multiplied by time, it equals the amount of money gained, or saved. With the above example, the rate of gain was $100 per month, in 12 months, this would equal $1200. In terms of the formula:
(Rg=$100 per month)*(T= 12 months)=$1200
When Re > RI, then Re - RI = RL In words this means when the rate of expenses is greater than the rate of income, the rate of expenses minus the rate of income, equals the rate of loss. The rate of loss means here the rate that debts are accumulating. For example, if the rate of income is $1900 per month, and the rate of expenses is $2000 a month, the rate of loss would be $100 per month. In terms of the formula this would be:
(Re=$2000)–(RI =$1900)=(RL= $100)
Rate of loss multiplied by time equals a sum of money representing accumulated expenses, or debts. With the above example, the rate of losses $100 per month, and in 12 months this would represent an increase in debt of $1200. In terms of the formula this is:
(RL=$100)*(12 months)=$1200 in additional debt.
Cash flow from the perspective of rate and the above formulas
RI − Re= Cash Flow In words this means the rate of income minus the rate of expenses equals cash flow, based on the definition I am using. Specifically, the rate of income (RI) is the rate that money flows into your system, and your rate of expenditures is the rate that money flows out of your system. When RI − Re =0 the cash flow is in equilibrium, when the result is positive, the cash flow is positive, and when the result is negative, the cash flow is negative.
All of the calculations discussed above can be performed automatically with the Budget Rate Calculator. This calculation device is available in four versions, as listed below.
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● Section 3 The Behavioral and Emotional Aspects of Money and Budgeting ●
When you want to buy something, try to delay the purchase, whenever feasible, to give yourself time to think. The thinking, should involve an assessment of the utility and value of the product or service. This can also include an evaluation of the happiness and pleasure that the purchase might provide.
Delaying a purchase also gives you time to evaluate any risks or adverse consequences that can be associated with a product or service. The most obvious risks in this regard are buying something that you cannot use, buying an item that wears out or breaks very quickly, and/or buying something that is not worth the money. However, there can be more serious risks associated with the purchase, such as running short of funds, (example: buying products you cannot afford) health problems (examples: cigarettes, or alcoholic beverages), and accidents (examples: automobiles, skis, and fireworks). This does not imply that you should totally exclude all products that have associated risks, because there are some risks associated with everything. The idea is to delay the purchase so you have time to determine the risks, and decide if you want to take the risks associated with the purchase. Learning about the risks that are associated with a product, can also help you reduce the possibility of accidents and other adverse consequences.
Delaying a purchase can provide additional benefits that were not mentioned above. When we delay a purchase our needs may change, or we may find a better alternative. For example, if we have an urge to buy some junk food, a few minutes delay might change our desires, or we may find a healthier source of food. If we want to buy a new electronic device, we might find a better alternative if we delay the purchase for a few weeks. Technology, in the electronics field appears to be improving continuously, and waiting can result in a better and perhaps also a less expensive product.
Delaying a purchase of a complex product or service provides the time needed to learn and study the related literature. For example, if we want to buy a computer, gathering information and studying it, may give us the knowledge needed to make a better purchasing decision.
In general, if we give ourselves enough time by delaying a purchase, we will have time to determine all of the following:
· Alternative brands or providers of the product or service
· The facilities that sell the product or service at relatively low prices
· Practical information about the product or service
· Technical information about the product or service
· Alternative products or services that may or may not be better than the product you routinely plan to buy
Thus, delaying a purchase is one of the most important methods of avoiding problems, and saving money. In some cases it can also save your health, and prevent your house from being cluttered with products that you do not need.
In spite of the benefits associated with delaying a purchase, you can delay excessively, which can be quite problematic in some cases. Delaying excessively can waste many hours or even many days, if you spend excessive amounts of time, window-shopping or reading about the product.
●●● How long should you wait before you buy ●●●
A useful delay time, before making a purchase, can range from a few seconds, to several months or longer, depending on the nature of the purchase. For a low-priced item, such as a snack, a delay of a few seconds to several minutes might be appropriate. For an expensive item, delays of days, weeks or months, or longer might be required to give you the time to evaluate the purchase. For example, if you plan to buy a house, or even a car, several months, or longer might be appropriate. Complex items generally require more time to evaluate, then simple items.
Delaying a purchase can produce even better results and savings, if you ask yourself the right questions. A list of questions to help you evaluate potential purchases is presented at the end of the next paragraph. You should add your own questions to this list. Your questions can be focused on your specific needs, circumstances and the product or service that you are thinking of buying. When dealing with complex products, it may be better to answer the questions in writing, ideally on a computer screen with word processing software, such as Microsoft Word. With word processing software, you can think and write, and then rethink and rewrite a number of times, until you get the best answers.
· This can result in rethinking, and it is appropriate to return to the same questions and change your answers.
· but getting there opinion after you answer the questions might be helpful.
· If I decide not to buy this product, will there be any adverse consequences, in the following, hours, days, weeks, months, and years.
· If I buy this product will there be any benefit or pleasure, in the following hours, days, weeks, months, or years.
· Will I be faced with any risks if I do not buying this product or service?
· What are the risks associated with buying the product or service?
· If you decide to buy this product or service, will it have an adverse effect on my health?
· Will this purchase make you healthier stronger, and more productive, or will it have the opposite effect.
· How does this purchase compare with similar or alternatives?
· Are there any alternative brands or alternatives products that are more durable, bettering functionality, and/or less expensive?
· If I buy this product the service, where can I obtain the best deal, and
When you answer the above questions, you should keep in mind that the goal is to evaluate a potential purchase in relation to your own needs, and financial circumstances. Thus, asking someone else to answer the questions for you might not be very helpful. Very often products or services that are useless for one person might be a sensible and very essential purchase for another. However, asking someone else's opinion, after you answer the questions yourself, might be helpful.
The techniques in this subsection are primarily for people who frequently feel an urge to buy either unhealthy or unnecessary items, and/or they purchase products or services that they cannot afford. Some of these individuals are impulse buyers, and they do not give themselves time to evaluate many of their purchases. If you often feel you spend your money unwisely, or if you believe you have an unhealthy habit, such as cigarette smoking, this subsection is for you.
In listed below there are several practical ways of increasing your self-control, to reduce your unhealthy, unnecessary, and excessively expensive purchases. You may know of or find additional methods that work well for you, and you should use them, along with the following techniques.
· One of the simple ways of controlling yourself, was already discussed, which is delaying a purchase that is unhealthy, unnecessary, or excessively expensive. When purchases are delayed, sometimes the urge to buy diminishes. During the delay, you should follow the other steps listed below.
· Silently talk things over with yourself, or perhaps another individual, in regard to the purchase. If you realize that you should not buy something, you can resist the urge better, the more you talk, and think about the reasons why you should not make the purchase.
· When you feel a desire to buy something that is unhealthy, unnecessary, or excessively expensive for you, distract yourself, with something pleasant, interesting, and challenging.
· Try to make your daily routine, and your entire life, more pleasant, interesting and challenging, in a healthy way. This can reduce the urge to carry out many bad habits, including dysfunctional buying behavior, but it must be combined with a deliberate effort to control behavior.
· Developing healthy eating habits, and engaging in regular exercise, might help you feel better, think better, and make better buying decisions.
· Learn relaxation techniques, and develop strategies of preventing conflicts with others. Some people buy unhealthy food, cigarettes, alcohol, and unneeded products when they are upset or nervous. Most people find it easier to control their behavior when they are relaxed and alert.
· Keep yourself away from stores that sell unhealthy, unnecessary or excessively expensive items. For example, if you do not want to buy junk food, stay way from fast food restaurants. The same applies to cigarettes, alcohol, and anything else that you want to avoid. If you feel the urge to just go shopping, go to stores that have economical products that you truly need.
· When you feel the urge to buy an unhealthy, unnecessary, or excessively expensive product, tried to substitute a healthy and economical alternative. For example, if you feel the urge to buy junk food, or cigarettes, because you are hungry, try buying healthy low-calorie food.
· Get rid of your credit cards. If this is not feasible do not carry your credit cards with you when you go shopping. It is very easy to lose track of how much money you are spending when you use credit cards. The same problem can happen with debit cards and checks, but perhaps too a lesser extent. and perhaps they should be left at home also.
· When you go shopping, do not take anymore money than you need to buy the items you truly need. Carrying excess amounts of money, can make it difficult to fight the urge to buy unnecessary, unhealthy, or excessively expensive items.
· Practice all of the above on an ongoing basis. If you find other techniques that works for you, include them in your practice. The longer you practice the above techniques, the easier things become very.
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Some of us are overweight, some of us are addicted to cigarettes, some of us drink too much alcohol, and some of us eat excessive amounts of junk food. All of this is the result of poor purchasing decisions, which can be the result in poor health habits, lack of knowledge and lack of willpower and determination to avoid unhealthy products. In relation to the purchases.
Some of us, our addicted to cigarettes, and some of us are of us are
Are you overweight,
From the perspective finance and budgeting, excessive body weight is the result of poor purchasing decisions. This can involve a lack of willpower and/or knowledge when buying food, coupled with poor purchasing habits.
To deal with willpower problem to all of the following:
Make sure your refrigerator and closets do not contain fattening or unhealthy food, because that will increase your temptation. This means you should develop the habit of not buying fattening or unhealthy groceries.
Make sure your refrigerator and closets contain healthy food that is low in calories. This means buying plenty of fruit, vegetables, low-fat dairy products, and lean meats.
Do not buy fattening or unhealthy food
Do not buy fattening or unhealthy food and unhealthy and fattening
Try to delay unhealthy food purchases,
in relation to the purchase of unhealthy
excessive body weight is poor purchasing decisions,
The cause of excessive body weight, is poor purchasing decisions.
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A popular way of saving money is to buy products that are on sale. This strategy can result in significant savings, if you are buying products on sale that you would normally buy at a higher price. If you were planning to buy an expensive item, such as a television set, and you hear about a sale, you might also save money, and/or get a better product.
However, buying things on sale may cost you more money than you save, if you end up buying things you really do not need.
It can be very difficult to determine the true value of certain items, such as clothing, shoes, electronic appliances, computers, television sets, radios, furniture. When these items are on sale, it may not be any real savings. The difficulty in determining value is partly the result of constant changes in technology. For example, a computer that was selling for $1500 a couple of years ago, might be on sale now for $$700, but this may not be a true bargain.
You can sometimes determine the value of an item by comparing it with similar items. However, it can be very difficult to make such comparisons, because there can be unseen weaknesses in a product, that reduces its true value. For example, an expensive looking pair of shoes, maybe stitched together with thread and glue that is relatively weak.
Store closings, can sometimes result in legitimate sales. For example, when a large store closes, the merchandise may be reduced in price, day by day, until everything is sold. This can sometimes lead to savings that are as much as 25 to 50%.
To sum all this up, you can save money by buying things on sale, if you normally buy that product at a higher price. If this is not the case, you may or may not save money. If you
One of the best ways to save money on products is to buy from large stores, especially discount stores. When you buy electronics devices, clothing, shoes, luggage, backpacks, from a small store, expect to pay more money. The large stores by in huge quantities directly from manufacturers, and they pay less money than the small stores that have to buy from wholesalers. In addition, the large stores sell in huge quantities, and they can sometimes make a good profit, by selling an expensive item for a few dollars above what they paid for it.
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F,or example, it can be very difficult to tell the true value
It can be very difficult to tell the difference between shoes that are selling for $100, and are marked down to $50.
Sometimes it is very difficult to determine if you are really getting a bargain by buying
Sales can sometimes also result in savings, when you find an alternative product on sale
This can result in significant savings, or it can cost you a significant amount of extra money
saving money by buying things on sale can be a good strategy,
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Are coupons a good way to save money, or poor time investment
Saving money with coupons, might be counterproductive, because of the small amount of savings, and the time and effort required to collect them. Coupons can also influence us to purchase unneeded items. However, some people like to use coupons, and perhaps some enjoy collecting them from magazines and newspapers. If this applies to you, coupons might be a good way to save a few dollars a month.
● Section 4 Introduction ●
● Section 5 Links to Other Websites for a Different Perspective, Financial Assistance, And More Information ●
Direct links and search page links
in this section you will find many links for information, resources, and financial assistance. There are two types of links in this section, direct, and search page links. The direct links will take you directly to a website. The search page links will take you to a search page, which will have many links to large number of links to
links to credit card companies
links to deal with credit card debt
links for financial assistance
Li for bankruptcy
links for credit card problems