Forward Budgeting: A Paperless and Electronic Household Budget System
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About this ebook
Do your finances seem out of control?
Are you discouraged when there is another financial emergency?
Does Christmas spending increase your credit card debt?
Are you frustrated and cannot get ahead of the bills?
If you answered yes to any of these questions, then Forward-Budgeting is a s
CPA Douglas C. Knisely
DOUGLAS C. KNISELY has two Master's degrees in business and religion. He has two other books Financial Sin and the New Financial Nature and Financial Miracles and the New Financial Nature. See www.dougkniselycpa.com. He is a widower with three grown children and four grandchildren. He resides in Grove City, Ohio.
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Book preview
Forward Budgeting - CPA Douglas C. Knisely
Contents
Introduction
Taxes and Tax Refunds
Tax Refunds and the Tax Burden
The Collection Methods of Governments
Wages and Income Taxes
Social Security and Medicare Taxes
Real Estate Taxes
The Set-Aside Fund
Christmas Spending
Christmas Spending and the Mechanics of the Set-Aside Fund
Questions for the Mechanics of Forward-Budgeting
The Set-Aside Fund Description
Safety of Principal
Check Writing Privileges
Automatic Deposits
Finding a Set-Aside Fund
Applications for the Set-Aside Fund
Back-to-School or College
Repairs and Emergencies
Vacations
Casualty Insurance Premiums
Review for the Set-Aside Fund
Automatic Payments
The Emergency Fund
Using Forward-Budgeting with Credit Cards
Conclusion and Summary
Appendix
Can God help with the budget?
SCARF
Endnotes
Introduction
Forward-budgeting is more of a concept than a budget. There are no monthly financial statements. There are no comparison schedules of actual spending versus budget. You do not spend time managing forward-budgeting except to write checks and balance your checkbook. You do not need to keep track of spending categories. There are no monthly accounting calculations. Many checks you write each month are replaced by electronic transfers. You must reconcile your checkbook each month, but you already know and do this. This is the dream budget system.
If you are like most people you hate budgeting. You also do not like accounting, mathematics, and financial statements. You do not look forward to financial discussions with your family especially attempting to find money for a financial emergency. The goals of forward-budgeting are to provide financial confidence, control, authority, and peace-of-mind. These goals are accomplished by making the budgeting process workable, easy to understand, time saving, and convenient.
Forward-budgeting uses electronic transfers and online banking transactions. So, you might call the process a paperless, electronic household budgeting system. Before we begin discussing the process, I have insight to share. This insight uses our very complex income tax system to make several points about cash refunds.
Taxes and Tax Refunds
I prepare tax returns for a living. The most important result for clients who file a tax return is a cash refund. Clients want tax refunds. They want money coming back. Writing a check and paying the government is one of the most dreadful and painful experiences in life.
With training as a Certified Public Accountant and as a Certified Financial Planner™, I can provide excellent tax planning strategies and savings.
It is possible to defer taxes into the future or to accelerate future taxes into the present. It is possible to have tax-free income. Taxes can be saved by shifting deductions between years.
However, the bottom line is that all the expertise and planning in the world does not receive the client’s attention and praise unless there is a cash refund. The main evaluation of a tax preparer is the ability to generate a cash refund. With a cash refund the preparer is the best person in the world. With a cash payment the client is upset, angry, frustrated, feels cheated, and ready to change accountants.
To assure there will always be a cash refund, clients agree and plan to simply over-withhold taxes during the year. The government uses the over-withholdings and the client misses out on possible investment opportunities. Nevertheless, the client demands a cash refund and will actually plan for over-withholdings during the year.
Taxpayers make these over-withholding decisions deliberately and often with contemplation and planning. The pain of making a payment to the federal government is one of the worst pains in our society. A payment to the government is a disaster, a repugnant act, and even a disgrace when compared to others who boast about their cash refund. The greatest honor goes to a tax return preparer that provides cash refunds.
Let