What are three qualities of a good budget?

What are three qualities of a good budget?

To be successful, a budget must be Well-Planned, Flexible, Realistic, and Clearly Communicated.

• The Budget Must Address the Enterprise’s Goals.
• The Budget Must be a Motivating Tool.
• The Budget Must Have the Support of Management.
• The Budget Must Convey a Sense of Ownership.
• The Budget Should be Flexible.

What is the 70/30 rule?

The 70/30 Rule of Communication says a prospect should do 70% of the talking during a sales conversation and the sales person should only do 30% of the talking. That means the sales person is actually doing more listening during the sales call than anything else.

What are the 3 rules of money?

The three Golden Rules of money management

• Golden Rule #1: Don’t spend more than you make.
• Golden Rule #2: Always plan for the future.
• Golden Rule #3: Help your money grow.
• Your banker is one of your best sources of money management advice.

What is a 20 10 rule?

The 20/10 rule of thumb limits consumer debt payments to no more than 20% of your annual take-home income and no more than 10% of your monthly take-home income. This guideline can help you limit the amount of debt you carry, which is important for your financial health and your credit score.

Does the 20 10 rule apply to all types of credit?

Mortgage loans and monthly payment commitments for housing are not included in these limits. -However, all other types of borrowing are included in the limits of the 20/10 Rule. If you have an annual salary of $42,000, apply the 20/10 Rule to determine your maximum borrowing and monthly credit payments.

What is the 20 10 rule for credit cards?

Following the “20/10 Rule,” it is a good practice not to let your credit card debt exceed more than 20% of your total yearly income after taxes. And each month, don’t have more than 10% of your monthly take-home pay in credit card payments.

What does the 10 20 10 rule mean?

A conservative rule of thumb for other consumer credit, not counting a house payment, is called the 20-10 rule. This means that total household debt (not including house payments) shouldn’t exceed 20% of your net household income. Ideally, monthly payments shouldn’t exceed 10% of the NET amount you bring home.

What is the 10 savings rule?

The 10% savings rule is a simple equation: your gross earnings divided by 10. Money saved can help build a retirement account, establish an emergency fund, or go toward a down payment on a mortgage. Employer-sponsored 401(k)s can help make saving easier.

How much money should you have after expenses?

The rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do. The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want.

What should your monthly expenses be?

The guideline offers a basic financial strategy for your spending and saving. The rule says that you should spend 50% of your income on your living expenses, like your rent and car payment. You should put 20% of your income in savings, whether that’s for a rainy day fund or a down payment on a house.

What do you call money left over after bills?

Discretionary income is money left over after a person pays their taxes and essential goods and services like housing and food. Disposable income is the net income of a person’s take-home pay and used to pay for all expenses (both essential and nonessentials).

What bills do most adults pay monthly?

Necessities often include the following:

• Mortgage/rent.
• Homeowners or renters insurance.
• Property tax (if not already included in the mortgage payment).
• Auto insurance.
• Health insurance.
• Out-of-pocket medical costs.
• Life insurance.
• Electricity and natural gas.

What is monthly housing expense?

Total monthly housing expense includes your monthly mortgage payment plus additional expenses such as property tax and homeowners insurance as well as other potentially applicable costs such as mortgage insurance, flood insurance, homeowners association (HOA) or co-op fees, special tax assessments, ground rent and …

What are some housing expenses?

Typical housing expenses include the principal, interest, property taxes, insurance and HOA fees. Most lenders will not approve a loan if the number is higher than 28 percent.

What are the four C’s of credit?

The first C is character—reflected by the applicant’s credit history. The second C is capacity—the applicant’s debt-to-income ratio. The third C is capital—the amount of money an applicant has. The fourth C is collateral—an asset that can back or act as security for the loan.

What are the five C’s?

The five C’s, or characteristics, of credit — character, capacity, capital, conditions and collateral — are a framework used by many traditional lenders to evaluate potential small-business borrowers.

What are the six basic C’s of lending?

To accurately ascertain whether the business qualifies for the loan, banks generally refer to the six “C’s” of lending: character, capacity, capital, collateral, conditions and credit score.