Financial planning today provides major benefits tomorrow, and for the remainder of your life.
Regardless of your current income level or personal situation, learn why you must be committed to the following personal finance strategies in order to secure your financial success.
Planning now for your financial future is, quite simply, a smart thing to do. The tools and process detailed here will pave the way for anyone who is serious about conquering their debt and taking control over their financial existence.
Financial planning is how you get from point A to point B, as well as points C, D and E. Depending on where you are financially today, you no doubt have multiple goals that you wish to accomplish. “Hoping” for your luck to finally change, or “waiting” for your ship to come in, is NOT a financial plan – it’s simply a dream.
Most people get into a set routine with their finances. The longer you allow yourself to continue down the same financial road without a clear map in hand, the more you lessen your chances of realizing your financial goals.
Let’s face it, most people are not known for their patience or their planning skills, and even less people are admired for their ability to save money. No one should be surprised to learn this given how the mass media is constantly teaching people in our society to “buy it now- pay later!”
To ensure financial success, people must break away from this destructive, and weak, mind-set.
Do not make the common mistake that financial planning is only for the wealthy, or that you must already have a good sized nest egg before meeting with a financial advisor. Nothing could be farther from the truth.
However, you don’t need to pay out your hard earned money for a professional. The most effective financial planning occurs in the home at the dining room table or home office.
Common tools include the household checkbook, a pen, calculator and a piece of paper with a line down the middle. One column is titled, “Cash Coming In”, and the other column reads “Cash Going Out”.
The main goal to keep in mind is that you want to spend every dollar of your monthly income ON PAPER, before you actually spend it. This way you will plan your expenditures for the month, knowing you have set aside adequate money to cover all the fixed expenses. In addition, you will have thoughtfully allocated the remaining funds to the areas of your life that are most important to you.
Examples of important financial goals might include:
Buying a new car Saving for a down payment on a house Future college saving Dream family vacation Purchase of investment property Planning for retirement years Regardless of what your financial goals are, your chances of realizing those goals are highly dependant upon your decision to plan ahead and your willingness to take action – right here and right now.
There is a great tool available to anyone who is not comfortable with sitting down and creating a household budget on their own. This important tool is called a Personal Financial Statement.
If you’ve ever applied for a loan or credit card, you have filled out the majority of what is found on a personal financial statement. Starting immediately, you can begin using the same process that a lender uses to account for all monies coming in and going out.
Once you have completed filling out a personal financial statement, you will have all the information you need to take the financial planning process to the level – that is, creating a budget that works!
“Budgeting” gets a bum wrap. No one likes to hear the word “budget”; however, it is the process of budgeting (aka. financial planning) that will ultimately set you free and secure your financial future. Too often, people make the mistake of assuming “only broke people have to budget”. The reality is that most rich folks are rich because they budget.
The decisions you’ve made up until now are the reason you are where you are today. The decisions you make today going forward will shape your destiny. The only real question is, “Where are you going?”. Decide well.
By: Richard Gorham
How to Begin Planning Your Financial Future
February 4th, 2010 by admin No comments »Budgeting – What Really Constitutes a Good Personal Financial Plan
February 3rd, 2010 by admin No comments »
In order for you to live comfortably, it would be prudent to have a budget that works for you. One aspect of a good budget it that it needs to based on your income and easy to adhere to. Having a friendly budget will motivate you to keep planning you finances prudently hence achieve your financial goals.
One of the important elements of a budget should include saving. An advisable way would be to have a savings account which you can be contributing to on monthly bases. Most banks offer an interest on such accounts hence you will benefit in the long run.
Another aspect would be to allocate some potion of your income to help the less fortunate in the society and not forgetting to give your tithe. God is the giver of wealth whether you believe it or not. Therefore, helping others will prompt the giver of wealth to release His blessing on you and one way would be by financially blessing you. In the bible, King Solomon stated that you should honor your God with your substance.
A perfect budget needs to take care of windfalls like wedding anniversaries, birthday parties and the like. Since these windfalls do not occur on a monthly basis, many tend to ignore or overlook them not realizing it can greatly result to overspending.
Personal budgeting needs to take into account your current financial status in regards to your spending patterns and habits. This will make it easy for you to make the necessary adjustments and maybe alter your spending habits and adhere to your financial plan.
By: Stephen Kavita
Financial Executives and Sales and Operations Planning Process
February 2nd, 2010 by admin No comments »
The American Production and Inventory Control Society (APICS) defines Sale and Operations Planning (S&OP) as the “function of setting the overall level of manufacturing output (production plan) and other activities to best satisfy the current planned levels of sales (sales plan and/or forecasts), while meeting general business objectives of profitability, productivity, competitive customer lead times, etc., as expressed in the overall business plan. One of its primary purposes is to establish production rates that will achieve management’s objective of maintaining, raising, or lowering inventories or backlogs, while usually attempting to keep the workforce relatively stable. It must extend through a planning horizon sufficient to plan the labor, equipment, facilities, material, and finances required to accomplish the production plan. As this plan affects many company functions, it is normally prepared with information from marketing, manufacturing, engineering, finance, materials, etc.”[1]
Sales and Operations Planning has also been described as “a set of decision-making processes to balance demand and supply, to integrate financial planning and operational planning, and to link high level strategic plans with day-to-day operations”[2].
In more simplified terms Sales and Operations Planning can be described as – STATE WHAT YOU ARE GOING TO SELL AND MAKE WHAT YOU STATE YOUR ARE GOING TO SELL. It really doesn’t have to be more complicated than that.
The benefits of S&OP are well documented and proven over time. The successful S&OP cycle will lead directly to improved customer service, reduced inventory levels, and increase the profitability of the business. And, most importantly, a well run S&OP will allow the business to quickly adapt and change to current market conditions – which is absolutely critical in today’s every growing world economy. So, why are some companies struggling to see the results?
It is my contention that most companies that fail or struggle with S&OP do so because of lack of management and leadership – in specific top tier executives do not buy into the process.
Top managers have a very difficult time of letting go of their ego’s and the notion that the direction of the business can be reduced to a succinct two hour monthly Executive Review meeting is hard for them to fathom.
How many of you are conducting a Pre-S&OP meeting? Unless your company has thousands of SKU’s (stock keeping units), there is no reason to conduct a Pre-S& OP meeting and the only reason they exist is because the top managers are “guarding” their numbers and don’t trust the capable people they have working underneath them. In short, the executives haven’t bought into the S&OP process and are more concerned with maintaining face with other executives rather than leading and directing the company to a more profitable state.
There is one top executive that every successful S&OP process must have buy-in from and, no it’s not the COO (Chief Operations Manger), nor is it the CEO (Chief Executive Officer) or President, nor is it the Board of Directors, it is the CFO (Chief Financial Officer).
All managers are judged by numbers of some sort. The CFO and other finance managers and the numbers they present greatly affect the management and direction of the business. All too often though, the finance team has their own unique set of numbers that are inconsistent with the numbers the operations team and sales/marketing team are working with. Having more than one set of numbers leads to very large disconnects – especially when presenting to the CEO/President or Board of Directors and cause severe disruption to the day-to-day operations of the business when other managers are brought in to “defend” their numbers.
Listed below are the reasons why the finance department must fully buy-in to achieve a highly successful S&OP process:
• Financial Integration. One of the many great outputs of the monthly S&OP cycle is the emergence of gaps between supply and demand and the ability for the management team to derive solutions to close the gaps. Executives and managers need to know the financial impact of decisions they are making to close the gaps between supply and demand. Often times, this creates financial variances that can easily and concisely be explained to top management and other major stockholders. It will no longer be a surprise that the month-end numbers differ from expected and can easily be explained or better yet curtailed before they happen.
• Financial Forecasts. The typical time horizon for a flourishing S&OP process in 15 to 18 months. Once the finance team fully accepts the output from each S&OP cycle, the quarterly financial forecast and the annual operating plan (AOP) or budget become an easily obtainable objective rather than mad diatribes and extended working hours. How many companies needlessly carry a staff just for the AOP/budgeting process alone or disrupt the flow of operations by tasking managers to obtain a separate set of AOP/budget numbers? Don’t you think those resources could be used more efficiently elsewhere?
• Inventory Levels. Agreeing upon one set of numbers is critical in determining the inventory levels a business decides to move forward with. It is imperative that managers know the financial impact of carrying fifteen days, thirty days, forty-five days etc… worth of inventory and the associated trade off in customer expectations, satisfaction and retention.
Reaching a consensus on a single set of numbers will allocate critical resources (including people, equipment, materials, money and time) to best serve and satisfy customers in a profitable way. Without garnering top executive level buy-in – especially the finance department -S&OP process is set-up to fail or at the very least run dysfunctional.
References
1. ^ Dougherty, J.R., “Getting Started With SaleS&OPerations Planning”
2. ^ Wallace, Tom, author of textbooks on Sales and Operations Planning
By: Paul Fischer