My Personal Finance Journey

Personal finance observation, musing and decisions in a journey toward financial independence by 2020 with at least $3 million.


By Topics

Overall:
0. About (10)
1. My Progress (139)
2. Car & Home (107)
3. Credit (138)
4. Banking (33)
5. Saving (49)
6. Investing (308)
7. Taxes (89)
8. Spending (74)
9. Misc (97)
A. Archive (49)



MONTHLY ARCHIVE

Feb 2014 (3)
Jan 2014 (6)
Jan 2012 (1)
Apr 2011 (1)
Mar 2011 (1)
Feb 2011 (1)
Jan 2011 (1)
Dec 2010 (1)
Oct 2010 (1)
Sep 2010 (1)
Aug 2010 (1)
Jul 2010 (1)
Jun 2010 (1)
May 2010 (1)
Apr 2010 (1)
Mar 2010 (6)
Feb 2010 (2)
Jan 2010 (7)
Dec 2009 (3)
Feb 2009 (4)
Jan 2009 (8)
Dec 2008 (1)
Jun 2008 (2)
May 2008 (2)
Apr 2008 (5)
Feb 2008 (3)
Jan 2008 (15)
Dec 2007 (32)
Nov 2007 (6)
Oct 2007 (8)
Sep 2007 (9)
Aug 2007 (24)
Jul 2007 (2)
Jun 2007 (1)
May 2007 (3)
Apr 2007 (4)
Mar 2007 (4)
Feb 2007 (13)
Jan 2007 (6)
Dec 2006 (3)
Nov 2006 (7)
Oct 2006 (7)
Sep 2006 (6)
Aug 2006 (4)
Jul 2006 (10)
Jun 2006 (1)
May 2006 (3)
Apr 2006 (2)
Mar 2006 (6)
Feb 2006 (6)
Jan 2006 (3)
Dec 2005 (1)
Nov 2005 (9)
Oct 2005 (8)
Sep 2005 (13)
Aug 2005 (25)
Jul 2005 (16)
Jun 2005 (17)
May 2005 (19)
Apr 2005 (20)
Mar 2005 (24)
Feb 2005 (23)
Jan 2005 (36)
Dec 2004 (40)
Nov 2004 (34)
Oct 2004 (17)
Sep 2004 (21)
Aug 2004 (59)
Jul 2004 (37)
Jun 2004 (31)
May 2004 (29)
Apr 2004 (52)
Mar 2004 (49)
Feb 2004 (49)
Jan 2004 (31)
Dec 2003 (48)
Nov 2003 (52)
Oct 2003 (29)
Sep 2003 (8)
Aug 2003 (5)
Jul 2003 (2)
Jun 2003 (2)
May 2003 (5)
Apr 2003 (2)
Mar 2003 (2)
Feb 2003 (3)
Jan 2003 (29)



 

Budget Does Not Have To Be Bottom-Up Only

Contributed by mm | April 28, 2005 12:18 PM PST

Sorry for the relative quietness at my blog recently. Between April and May, all Microsoft finance professionals, myself included, are celebrating the annual ritual of budgeting by working tremedous amount of overtime. Believe me, the process is excruciating. After all, Microsoft will become a $40-billion-plus company next year in terms of annual sales.

One important yet interesting step of our budget process is called "target setting." What does it mean? It means someone at the very top of the company draws a financial blueprint of the company for the next fiscal year in a very high-level model. For example, if we expect PC shipment to grow X% next year, our leaders will request our Windows Client business to grow (X+1)% in sales next year while controlling the cost growth to (X-2)%, thus effectively increasing profit margin by 3 percentage points. The real target-setting process is surely a bit complicated that that, but it is designed to be a top-down process with some (very) high level business thinking.

Once the top-level target for each product group is finalized sometime in March, leaders of each group will "cascade" down the targets to specific teams and regions. The next step: finance team will do the bottom-up budget, in which we plan the exact headcount, marketing resources, etc. to meet the cost target and also plan the revenue by product line and licensing type to meet the revenue target. The goal: to match our bottom-up budget to the top-down targets -- anything favorable to target (more revenue or less cost) is welcomed, but anything on the other direction will be questioned, and in most cases, denied. Whenever there is an unfavorable gap between budget and target, someone in the organization needs to make some hard decisions to redo the budget and meet the gold "target".

So, does it mean that the high-level top-down business modeling contains more business intelligence that the bottom-up planning? Not necessarily. But the key beauty of the process is to push people to think smart and make tradeoffs, instead of padding up all the resource requests without restraint. Without a target, every marketing manager will request multi-million-dollar budget to promote the smallest feature in Windows. But with a target spelled out for some middle-level managers, he/she will make the necessary tradeoff decisions and only the fittest investment ideas will survive. Smart thinking really happens in the process of fune tunning budget to meet target.

Same can be applied to personal budgeting. If you start your budget by looking at each spending category like grocery, car and entertainment, you might be tempted to "reward" yourself a bit here and there by adding some more allowance for next month's clothing or entertainment budget. However, to take a cue from Microsoft's multi-billion-dollar budget process, a better method should be to map out the big picture (total income and total expense target) first, and then tweak your bottom-up budget to meet the goals. This way, your increasing entertainment budget will come from savings in other buckets, instead of slowing your savings. Make sense?

This Post Has Received 9 Comments. Share Your Opinions Too.


Mr. K Commented on April 29, 2005

Great post. It makes a lot of sense to meet a budget in the middle from a top-down/bottom-up approach. I always compare my income growth to my expense growth and try to keep them in line. Including a profit margin goal between the two is a great idea. I am going to do the math right now for my past year budgets to see how I did from a net profit perspective.


EssayForMe Commented on July 25, 2017

We Can Write Your Paper For You - EssayErudite.com

Can You Write My Essay for Me ? How many times do students worldwide ask this question without finding an answer?
We'd rather not check the official statistics. At the same time, essays appear to be probably among the most popular academic assignments.
Students from various education establishments need to complete them constantly. If you are among those lucky ones, feel free to contact our customer service department and opt for an essay writing help


FlossieNah Commented on July 26, 2017

Absolutely NEW update of SEO/SMM package "XRumer 16.0 + XEvil":
captchas recognition of Google, Facebook, Bing, Hotmail, SolveMedia, Yandex,
and more than 8400 another size-types of captchas,
with highest precision (80..100%) and highest speed (100 img per second).
You can connect XEvil 3.0 to all most popular SEO/SMM programms: XRumer, GSA SER, ZennoPoster, Srapebox, Senuke, and more than 100 of other software.

Interested? There are a lot of demo videos about XEvil in YouTube.
See you later!


XRumer20170725


CarolynSmese Commented on August 5, 2017

Revolutional update of SEO/SMM package "XRumer 16.0 + XEvil 3.0":
captchas solution of Google, Facebook, Bing, Hotmail, SolveMedia, Yandex,
and more than 8400 another size-types of captchas,
with highest precision (80..100%) and highest speed (100 img per second).
You can connect XEvil 3.0 to all most popular SEO/SMM programms: XRumer, GSA SER, ZennoPoster, Srapebox, Senuke, and more than 100 of other programms.

Interested? There are a lot of demo videos about XEvil in YouTube.
You read it - then IT WORKS!
See you later ;)


XRumer201708


CarolynSmese Commented on August 5, 2017

Absolutely NEW update of SEO/SMM software "XRumer 16.0 + XEvil 3.0":
captchas breaking of Google, Facebook, Bing, Hotmail, SolveMedia, Yandex,
and more than 8400 another types of captcha,
with highest precision (80..100%) and highest speed (100 img per second).
You can connect XEvil 3.0 to all most popular SEO/SMM software: XRumer, GSA SER, ZennoPoster, Srapebox, Senuke, and more than 100 of other software.

Interested? There are a lot of impessive videos about XEvil in YouTube.
You read it - then IT WORKS!
See you later ;)


XRumer201708


CarolynSmese Commented on August 5, 2017

Revolutional update of SEO/SMM software "XRumer 16.0 + XEvil":
captchas solving of Google, Facebook, Bing, Hotmail, SolveMedia, Yandex,
and more than 8400 another subtypes of captcha,
with highest precision (80..100%) and highest speed (100 img per second).
You can connect XEvil 3.0 to all most popular SEO/SMM programms: XRumer, GSA SER, ZennoPoster, Srapebox, Senuke, and more than 100 of other programms.

Interested? You can find a lot of impessive videos about XEvil in YouTube.
You read it - then IT WORKS!
See you later ;)


XRumer201708


CarolynSmese Commented on August 6, 2017

Revolutional update of SEO/SMM package "XRumer 16.0 + XEvil":
captchas breaking of Google, Facebook, Bing, Hotmail, SolveMedia, Yandex,
and more than 8400 another categories of captchas,
with highest precision (80..100%) and highest speed (100 img per second).
You can connect XEvil 3.0 to all most popular SEO/SMM software: XRumer, GSA SER, ZennoPoster, Srapebox, Senuke, and more than 100 of other software.

Interested? There are a lot of introducing videos about XEvil in YouTube.
You read it - then IT WORKS!
See you later!


XRumer201708


Maryabrilk Commented on August 20, 2017

http://salexrumer.site/

Revolutional update of SEO/SMM package "XRumer 16.0 + XEvil":
captchas recognition of Google, Facebook, Bing, Hotmail, SolveMedia, Yandex,
and more than 8400 another categories of captcha,
with highest precision (80..100%) and highest speed (100 img per second).
You can connect XEvil 3.0 to all most popular SEO/SMM software: XRumer, GSA SER, ZennoPoster, Srapebox, Senuke, and more than 100 of other programms.

Interested? There are a lot of impessive videos about XEvil in YouTube.
You read it - then IT WORKS!
See you later!


http://salexrumer.site/
XRumer201708yy


MichaelNub Commented on September 14, 2017

buy effexor plavix 75 mg tablet medication crestor colchicine for pseudogout


Add Your Comments










Remember personal information?




(It will take a few moments for your comment to be published. Please do not close the window until then.)


Read More ... 50 Posts In The Same Category










This page was last rebuilt at September 14, 2017 12:43 PM PST. (508 Words)
 

RSS FEED





PERSONAL FINANCE BLOGS I READ

Consumerism Commentary
Get Rich Slowly
My Money Blog
All Financial Matters
The Simple Dollar






.



Copyright 2003-2014, PFBlog.com. All Rights Reserved. (Privacy Policy)