VUAC Finance

Posts Tagged ‘Budgeting’

Holidays are a great time to relax and chill out; forgetting the stresses of our daily lives and sunning ourselves, or indulging on some extreme sports. Whatever your choice of holiday, its a chance to get away. But we save for them all year round, beginning the process of saving for next year as we get off the plane from this year’s holiday.

A firm may be interested to invest its current funds most efficiently in the long term assets in anticipation of an expected flow of benefits over a series of years. This decision by the management is called as “Capital Budgeting”

The long term assets are those which affect the firm’s operations beyond one year period. The firm’s investment decision would generally include expansion, acquisition, modernization and replacement of long term assets.

Capital budgeting also refers to investment or capital expenditure decisions.

Capital budgeting or capital expenditure includes all those expenditure which are expected to produce various benefits to the firm over one year period and it encompasses both tangible and intangible assets.

Creating a budget is hard work, as I and others have discussed elsewhere. Yet having a strong, accurate budget is an essential step towards financial freedom. Once the budget is created, then you need the determination and commitment to keep that budget, which can be difficult given the temptations of the world we live in. One of the ways to keep you on track is to include rewards in your budget.

Types of Rewards

While there are almost an infinite number of things that can be rewards, depending on your personality, there are really two types of rewards when it comes to maintaining your budget.

“A man may, if he knows not how to save as he gets, keep his nose to the grindstone.” Benjamin Franklin

“The amount of money you have has got nothing to do with what you earn. People earning a million dollars a year can have no money and people earning ,000 a year can be quite well off. It’s not what you earn, it’s what you spend.” Paul Clitheroe

“A penny saved is a penny earned.” Benjamin Franklin

What is a budget? In the United Kingdom a budget is an itemized statement that reflects the financial status of the U.K. for the coming fiscal year. It contains proposals for spending, for tax purposes, and is presented to the nation in a speech delivered by the Chancellor of the Exchequer. It compares to the State of The Nation speech by a U.S. President. Another meaning of the word budget as found in the dictionary is: a plan specifying how the resources, especially money, will be allocated or spent during a particular period. It can also mean the total sum of money set aside or that will be needed for a specific purpose.