The personal and family money managemen

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Personal and family financial management entails duties like managing investments, carrying out domestic errands, keeping an eye on the budget, and handling the checkbook. (Garman and Forgue 170). Although budgeting is a crucial job, personal and family money management is where the majority of conflict occurs. Due to this, the study's goal was to determine why planning is a challenge for managing personal and family finances. Budgeting should ideally limit thinking by severely restricting expenditure and thinking. The motivation behind wishing to pursue this idea is that budgets have repeatedly failed to support wise financial decision-making in personal and family financial management. Therefore, financial plans are perceived to be a barrier to innovation and change rather than an aspect that can drive the strategy forward. This is because they do not precisely reveal the full cost of family and individual services and projects. Additionally, the budgets are a problem for the reason that they provide poor value to users. Although some members of the family may perceive that the budget gives them control, some of them would think that it is irrelevant to their needs. Budgeting can also guide to spending that is not necessary.

Information

There is a broad range of financial reporting obtainable, which is perceived to be needed to appropriately address the question of budgeting as a problem to personal and family money management. The first kind of information is based on company level data. This information was looked for in the primary data of an organization financial reporting. Here, the information that was found involved the quarterly report and annual reports of various enterprises. The company level data was also obtained through secondary sources, which was gained through various websites. The other kind of information perceived to be crucial in addressing the study question is the financial statement. For example, this includes audit reports, as well as, balance sheet and income statement, which were sources for more information. The income statement provided the expenses and revenues achieved over a period. The stock presented the financial position observed at a given point. The needed information was also looked for in the cash flow statement, which was useful in tracking the cash position of an organization. This is achieved on a monthly basis. The concept can also involve the history of the cash flow in regards to personal and family money management. The needed information was also looked for in newspapers and magazines. Ideally, the benefit obtained from the annual report information is that it presented primary information, which is considered to be authentic (Gupta 818).

Interpretation, inference, and concepts

This study concluded that a problem that arises from personal and family money management results from budgeting. Such issues include first, inaccuracy. This is a problem that arises because the budget is formulated strictly within operating conditions. This means that personal and family cost structure and revenues may change so radically if the environment changes. Therefore, the actual outcome will be off the anticipations marked out in the budget. Ideally, this circumstance leads to a problem, which may arise from a sudden economic downturn that will be difficult to handle since the budget only permits a certain level of spending. Furthermore, based on the concepts found in the information discovered, and based on the logic of reasoning using those ideas, it can be deduced that budgets are also a problem to personal and family money management because they lead to rigid decision-making.

Additionally, the process only focuses on strategy in the course of the formulation of the budget. This implies that there is no routine commitment to re-examine policy during the rest of the time. Therefore, there is no system in place to formally review any fundamental shift in the market. This means that the budgets are a problem for personal and family money management because they need to be changed as circumstances change. Also, rather than the needed long-term decisions in regards to money management, the approach leads to short-term decisions to keep within the budget. Budgeting applied unsuitable cause various unfortunate consequences (Dugdale and Lyne 17).

Assumptions

Some of the things that were assumed in having concluded that budgeting is a problem to personal and family money management include first the concept that they provide poor values to the users. Here, the insight is that the value presented by the process of budgeting differs widely. This is because some members of the family may perceive that the approach gives them control while others will argue that it is not relevant to their needs. In the second place, the budgets also promote a dependency culture. This is because, in a budgeting environment, the way to prosper and survive when it comes to personal and family budgeting is to meet the budget by doing what is told. Furthermore, the slack in the budget transpires if the targets are set too low. The approach can also lead to a rivalry between the family members, whereby they can battle over the allocation of the budget. There will also be de-motivation in the household when there is the setting of unrealistic targets. The de-motivating also occurs among the family members if they are imposed rather than negotiated. These assumptions were obtained through a wide variety of approaches and data, which involved industry projections, purchasing surveys, and historical trends based on budgeting. For this reason, encouraging and allowing the members of the family to take part in the financial decisions of the family and the responsibilities for money management would be beneficial in many ways (Garrett 99).

Implications and consequences

If the entire world were to accept this conclusion, the implication is that they will start to question the significance of the traditional budgeting altogether and start searching for alternatives. This is important because such substitutes will better align the personal and family money management with strategy. This conclusion will also help many people to realize that the dynamics of the process of budgeting undermines their effort to revert to the command-and-control procedures that are more centralized to keep a tight rein on costs. On this note, when it comes to personal and family money management, many people will dispense with budgets entirely. This will allow them to substitute budgeting with more useful key performance indicators and system of rolling forecast that would shift to strategic decision-making when it comes to personal and family money management. Additionally, another implication of the conclusion arrived at in this study is that it will enable those who have accepted it to realize that budgeting is a mark of the old management approach of command-and-control. For this reason, as long as it is in place, the innovative tools intended to decentralize decision-making in personal and family money management will never reach their full potential.

Conversely, the consequences of rejecting this conclusion are that many people will continue keeping budgets when it comes to personal and family money management, and, in turn, the management will continue to have the incentive to favor the short-term objectives over the ones for long-term. Answering the problems of personal and family money management linked to budgeting will not be possible because there will be no way to get rid of the inflexible strategy to targets that are short-term. When considering budgeting, the trick that many individuals tend to miss is that the processes of decision-making are rarely about science and technique and they are much more about organizations and people (Piercy 460).

Point of view

The guardrail in approaching the investigation of the study question was based on what had influenced one’s life in regards to budgeting as a problem to personal and family money management. Here, the observation is that the finance department time and again oversees the performance and budgeting. In the second place, the planning is matched by the strategy department. As a consequence of budgeting, the two processes are time and again not well incorporated. This leads to policies, which are repeatedly portrayed by the methods of budgeting instead of vice versa. Therefore, when it comes to personal and family money management, the decisions of the management is often blinded by the impact of the unit’s investment proposal on the long-term-value. This is because the personal and family money management involves responsibilities such making investments, doing the household shopping, overseeing the budget and handling the checkbook (Garman and Forgue 170).

Works Cited

Dugdale, David , and Stephen Lyne. Budgeting Practice and Organisational Structure . Elsevier, 2010.

Garrett, Sheryl. Personal finance workbook for dummies. Hoboken, NJ, Wiley, 2012.

Garman, E. Thomas., and Raymond E. Forgue. Personal finance. Boston, MA, Cengage Learning, 2017.

Gupta, Ambrish. Financial accounting for management: an analytical perspective. Delhi, India, Dorling Kindersley (India) Pvt., 2009.

Piercy, Nigel. Market-Led Strategic Change. revised ed., Routledge, 2008.

June 19, 2023
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Ecology Finance

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