Budget is simply balancing your expenses with your income. If they don’t balance and you spend more than you make, then you could end up with a big debt. Many people don’t realise that their expenses are more than their income and slowly get into debt.

When we think of budgets, we think of a typical household budget. This could be looking at how much we allocate to various expenses like utility bills, mortgage and household groceries. This usually works well for individuals, but it’s more complex in businesses.

Companies normally use budgets to plan for future growth and expansion. Budgeting for future growth opportunities ensures that companies have cash they need to make decisions on expanding the business. Many companies review previous year’s budgets to determine how well they performed against budget and why there are variances. Not all budget variances may indicate a negative business situation. If budget variances occurred due to unexpected growth in sales revenue, companies may need to increase the budget amounts for future sales increases. However, if it was due to overspending, then there is a need to investigate and take necessary action.

Why is budgeting important?

budget_3bA major benefit to using a business budget is the ability to control how much money is spent on overheads.

Budgets also provide opportunities to plan for new challenges and ensure that there is effective cash flow management.

As the care industry is being squeezed to offer services at a lower cost, most care businesses are looking for ways of making savings and this can’t be achieved without budgets.

However, budgets are not only for companies but for individual’s managing their expenses against their income.

Planning and monitoring a budget will help identify wasteful expenditures, adapt quickly as financial situation changes, and achieve financial goals. When you actually see the breakdown of your expenses, you may be surprised by what you find. It could be those items that you bought six months ago that are still in the boxes and haven’t been unwrapped.

Since budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you. Following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt. When spending is under control, you will be well on your way to meeting your long term financial goals.

If you don’t have enough money to do everything you would like to do, then you can use this planning process to prioritize your spending and focus your money on the things that are most important to you.

With a budget you don’t have to fear or wonder if you have the money because you already know. This sense of financial clarity is important not only to companies but individuals.

Like any other Christmas, there will be temptations to spend big, but stick to your budget if you have got one.

Budget Growth

With a budget there are no surprises!

A Christmas Nativity Economic Tale (or which was the most valuable gift from the Wise Men?)

In the Christmas Nativity story the Wise Men famously brought the baby Jesus gold, frankincense and myrrh, but which was the most valuable?

As everyone knows gold is a precious metal extracted by panning in a stream – think the American Gold Rush, or mined from beneath the earth.

Frankincense is a milky white resin extracted from species of the tree genus Boswellia.

Myrrh is a reddish resin that comes from species of the tree genus Commiphora.

Today an ounce of gold will cost you approximately £745 per ounce, frankincense £10 per ounce and myrrh £12 per ounce.

The Bible does not say how much of each of the gifts was given but assuming that each package was of equal weight then gold would have been by far the most valuable gift of the three – at least in monetary terms.

People used to believe that if you were suffering from leprosy, plague or a snake bite (or various other ailments) then frankincense or myrrh would cure you. Modern research does however suggest that frankincense may alleviate the symptoms of asthma and arthritis amongst other ailments and myrrh – ulcers, tumours and parasites. There is also research into how nanoparticles of gold could help destroy cancerous tumours. From a good health perspective it therefore appears that the Wise Men may have been aptly named.

Gold, frankincence & myrhh

Living Wage and Pay Increase

Liaise Loddon is currently embarking on the process of becoming accredited by the Living Wage Foundation. As part of our commitment to becoming a fully signed up Living Wage employer, we are raising the lowest hourly rate paid to our support workers to £7.85 per hour, in line with the current Living Wage level set by the Foundation. This means that all our co-workers, no matter what qualifications or experience they have, will be paid at least a Living Wage. As part of a sector in which many companies routinely pay only minimum wage to care workers (at the moment only around 20 care home providers out of  5000 nationally are signed up to the Living Wage), we believe that by committing to the Living Wage we are helping to improve working conditions not only for our own co-workers, but for all care workers by leading the way for other employers.

To find out more about the Living Wage Foundation visit their website at http://www.livingwage.org.uk


The Importance of Pensions

Whilst not the most exciting of subjects, a decent personal pension is important if you are going to enjoy the years after you retire. It also gives you greater flexibility on when you can retire.

The State Pension age is gradually increasing – as I know personally because when I thought I was within 10 years of drawing my, I hate to say it, old age pension,pound-coin-1523033 I had a letter saying my state pension age was increasing by a year! For those now in their twenties, or perhaps older, there is the possibility that there will be no state pension at all, or if there is one, it is set at a lower level, in real terms, than today.

The company pays more contributions on your behalf than it is legally required to and has also set your contribution at a higher level in order that you build up a reasonable fund. money-iii-1254139The company’s rate of contribution is set but it is possible to pay more contributions yourself and, subject to limits, get tax relief on these. It is also possible to make a greater salary sacrifice, again subject to limits, although this is an area the government is looking into and there may be greater restrictions in the future.

Most co-workers are in the company scheme but if you are not then it is worth seriously considering why you have opted out. If you leave the company and join another employer’s scheme it is important to consider the level of contributions being made and whether you wish to top these up.

pound-coin-1523033As referred to earlier having your own pension gives you greater choice on when you retire although the earlier you start drawing it the smaller the pension you receive.

The company can not give specific pension advice as, by law, this has to be provided by someone properly licensed to do so. If you are a member of the company scheme or thinking of joining then you can ask advice from Scottish Widows who manage the company scheme.

pound-coin-1523033Relying on a lottery win to fund your retirement is a very risky strategy. Relying on being able to work beyond your retirement age is also risky as no one knows what the future holds and you may not be able to continue working for a variety of reasons.

It is worth bearing in mind that when you retire you have more time to do things than when you are working and so your requirement for money to spend enjoying yourself may well increase. Thinking about how much you will need is a good place to start when deciding if your pension is going to be adequate for your needs.SONY DSC

It is never too early (or late) to make pension contributions. If in doubt, take advice now.

David Grist, Finance Director