Using the Budget Features in Quicken 2008

Transcription

1 Using the Budget Features in Quicken 2008 Quicken budgets can be used to summarize expected income and expenses for planning purposes. The budget can later be used in comparisons to actual income and expenses to determine whether expectations are being met. If expenses are "over budget", measures can be taken to rein in costs before financial problems are out of control. In this "hands on" session we will use a previously developed file of records for the London farm to practice generating budgets. You will be able to practice many of the steps that you might use in summarizing your own records. Using these instructions, you will: Develop a whole farm budget for 2008 based on 2007 transactions Compare actual records to the budgeted amounts In Quicken, click File Open Double-click C:\Workshop files LOND08 Click OK. To access the budget features in the file, click Planning Budget Note: If you don t get the following screen, click on the Setup tab at the upper left corner of the Budget screen. 1

2 Select Automatic. (A budget is created using your existing information.) Click Create Budget. Complete the screen: Note: If this is the first time a budget has been created in the file, the default name is My Budget. You can click on Rename in the setup screen if you want a more personal title. This will base the budget for the coming year on the transactions entered for the most recent full year of data, 2007, maintaining the same monthly pattern for income and expenses. Since the amounts are not likely to be exactly the same, we chose to round the values to the nearest $10 for planning purposes. Click OK. OK Click OK. Note: You will not get this pop-up message if this is your first budget. 2

3 A budget screen will be opened that contains: 1. A budget by category on the left side. You can select the tabs across the top for Income, Expenses, Savings, or Summary. 2. A window to allow you to change the monthly amounts for each category at the right. 3. A Show category groups box. Deselect it to eliminate the discretionary/nondiscretionary labels and sorting. 4. The Totals sum for the Monthly, Quarterly, or Yearly averages. 5. The Choose Categories button at the bottom left of the screen allows you to select specific categories for a budget. Click it to open the following popup window. 3

4 Click on Clear 0 amounts to exclude previously unused categories, but include all categories that have an amount recorded. OK To view the annual total rather than the monthly or quarterly total, select Yearly from the Totals drop-down menu at the bottom of the screen. At the right of the screen, you can change the monthly amount for the item that is selected at the left (as shown, Government Payments): 4

5 Let's say that the Londons expect a few items to be significantly different this year and want to edit those amounts: 1. Government payments are currently budgeted for March. The Londons plan to split government payments between March and December. Click Government Payments, click the box next to the appropriate month and enter the new numbers: $1,100 in March and $2,000 in December. Click Apply (button at top right of column). Note that the totals are automatically updated. 2. Jack has taken a part-time job and expects to earn $1000 each month. Move the cursor to the Salary row at the bottom of the Income section, and then update the January amount to To copy the first month and paste to the other months, you must right click on the 1000, and select Copy. Move to the next month, right click and select Paste. Repeat the pasting until all 12 months are filled. Then click Apply (or press Enter). 3. In the Salary Spouse row, enter 1850 in each month needed in the same manner. Remember to click Apply to retotal. Note: Don t try to use [CTRL+C, X, or, V] to copy, cut, or paste, respectively, as you might in other software. You can right click on the box to Cut, Copy, and Paste numbers in this screen. Click on the Expenses tab. 4. Jack and Julie know fuel is more expensive than last year, so they want to budget more for fuel expenses in the coming year. Click on the Gas, Fuel, & Oil, Farm line. For January and February, the amount should be 330. Other fuel expense entries should be: March, 410; April, 420; May, 260; June, 4450; July, 3380; August, 760; September, 1110; October, 260; November, 260 and December, 300. Enter these numbers in the appropriate cells and click Apply. Continue to edit items in the budget to reflect your planning assumptions for the year. Make the changes to each category line, clicking Apply (or pressing Enter) after the monthly detail is updated. Click the Summary tab at the top left of the Budget window to view your information. You will now see a summary of your anticipated income and expenses for the coming year by month. 5

6 The note at the top alerts us that we may have to use savings or draw on a line of credit to cover expenses in some months this coming year. Note: If you have a printer, you can print the budget by clicking Print at the top left of the budget window. OK Once you have created and saved a customized monthly budget, actual year-to-date income and expenses can be compared with the budget. Note: If you closed the Budget window, click Planning, Budget to open it, Click Reports Monthly Budget Report 6

7 (Or from the main menu line, click Reports, Spending, Monthly Budget.) Click Customize Select Date Range: Custom Dates and type the starting date as 1/01/08 and the ending date as 2/29/08. Note: The Custom Date cannot be earlier than the current date so select Yearto-Date if using these instructions before 01/01/2008. Type the Title: London Monthly Budget Jan-Feb and select the Budget: Budget Click OK. This report can be used to see whether expected income and expenses are being realized. Scroll through the report to compare actual income (inflows) and expenses (outflows) to budgeted amounts by studying the Difference column. If income is below budget or expenses are above budget, changes in management may be needed to avoid financial problems. To save this report for future use, click on the Save Report icon at the top center. Look at the graphical presentation of budget variances (if the graph is not showing, click on the Show Graph button to the right of the report). A blue bar above the zero line shows favorable variances, that is, cash inflows are above budgeted amounts and/or cash expenses are below budgeted amounts. Point at one of the bars and you ll see that a magnifying glass appears, meaning you can zoom in on the transactions that support the graph. Double click on the bar and you ll get a report listing the transactions for the month. To return to the original graph, click on the Back button. Click on the X in the upper right corner to exit. If you get a prompt, click on Don t Save. 7

8 London Monthly Budget Jan-Feb 1/1/2008 through 2/29/2008 Using Budget 2008 Category Description 1/1/2008 Actual Budget 1/31/2008 Difference 2/1/2008 Actual Budget 2/29/2008 Difference 1/1/2008 Actual Budget 2/29/2008 Difference INFLOWS Capital Sales, Farm 0 10, , , , Co-op Distributions Government Payments Interest Inc Raised Sales Grain Livestock Other Raised Sales TOTAL Raised Sales Salary Other Salary , , , , , TOTAL Salary , , , , , Salary Spouse 1, , , , , , TOTAL INFLOWS 2, , , , , , , , OUTFLOWS Auto Gas Service Other Auto TOTAL Auto Bank Charge Charity Christmas Clothing Consultants, Farm Dining Dues Farm Dues Other Dues TOTAL Dues Entertainment Feed Purchased , , Fertilizer & Lime , , , , Freight and Trucking Gas, Fuel, & Oil, Farm Gifts Groceries Home Repair Household Insurance Other Insurance TOTAL Insurance