Managers' Tool Kit for Financial Decision Making

Describe your experience in finance and accounting including professional and personal budgeting. Share what you consider to be important when making a significant financial decision, such as buying/leasing a car expanding a small business or deciding to buy a home or income property.

It is important we understand what a budget is before I describe my experience in budgeting. A budget to me is a plan for one's future income and expenditure that can be used as a guideline for spending and saving. It's worth to note that one cannot spend what they don't have hence necessity of a budget to avoid failure of projects. Budgeting does not apply to money only but also to other resources such as time.

In my personal life budgeting skills have come in handy, before end of the month when am expected to get my paycheck, I have to write down what cash has to taxes, bills, food, education, clothing, rent and what share goes to savings. This is important since human wants are unlimited which have to be satisfied with our limited resources and I am human being who subscribes to this principle. Having noted that we have limited resources and all wants have to be satisfied, I have to prioritize which want has to be satisfied first. Taxes normally come first since I do not want to fall on the wrong side of the law.

Regarding professional budgeting, because of internal control amounts, the agency principle, the different number of projects that have to be carried out and the amount of funds involve,budgeting is normally carried out by a budget committee. This committee has to hold meetings that evaluate company performance, establishcost of the project, the available funds, available options of obtaining further funds and which amount goes where. Just like personal budgeting, different projects need to be carried out but due to limited resources prioritization has to be exercised.

However organizations have huge financial muscles and have access to different financial options, such grants, share capital and organizations can obtain loans of huge sums at favorable rate as compared to individuals depending on their reputation and hence can budget for what is on other people's pockets.

When making a significant financial decision a number of factors have to come into play but the most significant one is the current financial situation and the options of further financing that are at my disposal.
For one to make a financial decision it calls for understanding of how money flows.