Signature Assignment: Personal Budgeting Pros & Cons
Finance & Budgeting / MGT-314
June 19, 2017
Professor Joseph Moussa
Touro University Worldwide
Signature Assignment: Personal Budgeting Pros & Cons
In this Week 8 Signature Assignment, I will review the pros and cons of personal
budgeting. From the easiest to most difficult portions of developing and sticking to a budget,
what I learned about myself after putting together a budget, how useful I believe a budget will be
in my personal finances and finally, the advantages and disadvantages of abiding by a strict
budget will be reviewed.
Budget Completion Aspects
Beginning with the simplest concepts of budget preparation, I will discuss the entries that
exist in the spreadsheet. The first stage, putting in your weekly paycheck numbers and adding
columns for bills which are mandatory such as electric, transportation, food, etc. you can begin
to see how and where the excess funds are. It is important to have a goal in mind for saving so
that you can invest properly to maximize your future value of money concepts discussed in this
course (Berger, 2015).
The second stage is putting in added expenses for things like personal care, clothing,
entertainment. By setting limits to these things you can keep your extraneous expenses to a
minimum. As you head deeper into the budget, you will need to know your savings goals out of
each paycheck to move into separate accounts, credit card bills, cell phone bills, and money for
car repairs (if you have a vehicle) in the event that something happens or to cover routine
maintenance needs, etc.
When we look at our budgets, considering the categories for credit card payments,
entertainment, clothing, food and other variable cost expenses, it is important to break down
these things into lists to obtain proper numbers for needs to ensure that you do not overspend.
These are a few categories that can get out of control quickly if they are not properly planned for
(Berger, 2015). During my planning phases, I make specific lists of items needed, stores that
have these on sale, etc and stick to the lists utilizing coupons to maximize my budget.
The most difficult concepts to put into and adhere to within the budget are things such as
unknown expenses. Should you be about to start a new job and wish to estimate your expenses
with the budget, estimating your monthly expenses for health care can alter your budget
accordingly. You may not know what you need for out of pocket costs or what the policy may
cover until you are substantially into the new position but estimating these costs can help put you
on track. Additionally, sticking to the budget so that you have your end goals in mind (what you
established in the beginning of the budget). When you are seeking to save significant amounts of
your check for additional investments or to save for the future, you may find it hard to stick to
your budget because the cash you are saving is sitting in your account.
If saving is a bane of your existence, consider alternate investments such as savings clubs
to assist you with becoming acclimated to saving money rather than spending idle cash. IRA’s
(individual retirement accounts), stocks, bonds, CD (certificates of deposit), money market
accounts, and money market funds are great alternatives to traditional savings accounts and often
(where applicable) come with not only higher interest rates, but lock in your investment for a
predetermined amount of time while significantly helping you credit rating (in some cases)
(Campbell, 2016). Personal bankers can advise the best alternatives for you and your goals and
are free of charge to use at many investment banks.
After reviewing the fundamentals of this course while having signifant experience in the
world of investment banking/alternative assets, I have to say that I learned a great deal about the
future value of money concept as well as the valuation of dividend payments presented as part of
Traditionally, I viewed investments as something for the wealthy being that I came from
the side of investing that was geared toward clientele with a minimum of $5 million in liquidity
and where the investments were locked out to new clients unless referred by existing clients.
After review of the alternative investment options and their impact on not only the credit of the
holder but the additional income that they create, I am now working on a budget for the future
that includes investment funds so that I can not only set my retirement (outside of the offerings
of an employer) but allow my stock knowledge to drive my investment strategy with the help of
a good investment advisor.
Value of Personal Budget on Personal Finances
As someone beyond the years of a normal college student, I can attest that a budget is an
imperative part of financial success for an individual. By utilizing budgets we can easily plan
our paychecks and savings plan while utilizing everything in our power to save money for the
As we learned from the future value of money that an investment today is worth a greater
value in the future and is necessary for assisting with retirement planning. By saving today we
are securing our future stability once we reach the age of retirement.
Relying on the 401(k) or retirement benefits from an employer are not enough for
someone to rely on. Markets shift and have a positive or negative effect on our retirement
accounts so having a good, stable, reliable relationship with our investment advisor and crafting
an additional investment outlet or outlets is necessary to ensure we enjoy the last years of our
lives as we did the first years of independence. Understanding how an investment today can
make all of this a reality is key to our future happiness.
The Good, The Bad, and The Ugly
As we dive into budgets, the single hardest part of the formulation is abiding by the plan
we develop. Impulse sales, a new car, and other unplanned purchases have us striving for the
shiny items we currently do not possess.
Perseverance and understanding of our goals, while working with vehicles that ensure we
save and do not spend liquid cash will make these plans a reality. However, as discussed
previously, the impulse spending is the ugliest of the problems in the budget formulation to
adhere to. When drafting a budget for planning and future success, it is imperative that you
know your habits, plan accordingly and train yourself to curb these habits for your own benefit.
While we train our thought processes to accept this strict budget adherence technique(s),
we come to understand how to lock up our funds for investment to make the money “out of sight,
out of mind”. Can we live without those shiny new heels in the designer clearance sale? Of
course, we can!
While diving into the topics in the weekly review for this course, I had what alcoholics
call “a moment of clarity” whereby I realized that at my mid-age currently, with the right
education and a clear path of what you want your future to be, you can overcome slight setbacks
and secure your future with the proper financial planning techniques.
My strategy and budget submission will include credit rebuilding tools to help my overall
score while my student loans are coming to maturity, as well as what can be put into IRA
accounts and other investment vehicles in order to properly secure my future.
While these investments are being coordinated, I look for a long term lock up period to
ensure the best possible return and security of my investments (no ability to draw from or redeem
in a time frame). I start small and then invest more as cash flow becomes more liquid around the
time of bonus season within financial markets as well as pay down long-term debts less they
continue to pile up beyond a place where they are managed.
The budgets I draw up have an allowance for one year in a roommate situation while I
rebuild in order to more stably secure my finances, save for needed items while paying down old
debt and rebuild credit while sticking to a very stringent budget whereby little is needed and my
savings grow as do my investments to maximize my future value of money as dictated earlier.
Proper planning today secures all we need for the future. Curb impulse spending and
secure your finances before it is too late. Understanding of how the future value of money and
the dividend payments on stocks owned can impact your future financial success will help you
with your strategies and overall financial success.
Berger, R. (2015, 07 26). 7 Tips for Effective and Stress Free Budgeting. Retrieved from Forbes:
Campbell, J. (2016, 05 23). Eight Alternatives to a Traditional Savings Account. Retrieved from
Money Management International: