HOW TO: Plan An Effective Budget

If you're currently spending more than you earn, it's crucial to find a way to balance your budget. Those who don’t address the situation could find themselves in a downward financial spiral that’s difficult to escape.

Here are tips to help you balance your earnings and outgoings.  

1.   Boost your budget by saving on essentials

If your budget doesn’t balance or you’re looking to free up some extra cash, the first thing you should do is try to cut the cost of essential household goods and services. The changes you make aren’t likely to make you feel deprived – but they will help to keep more cash in your pocket.

2.   Cut the cost of your debts

If you have existing debts – particularly on credit cards – these are likely to be an expensive drain on your budget. However, taking out a new or a Life of balance transfer card could cut your interest costs dramatically, allowing you to pay off your debt more quickly. In turn, this will speed up the process of balancing your budget.

If you’re thinking of applying for a loan to consolidate existing debts, you should ensure you have a plan to pay off what you owe. Sometimes people who try to bring all their borrowing together in one place continue using their credit cards, ending up in a far worse situation than before.

3.   Assess the 'extra spending' in your budget

If your budget still doesn’t balance, it’s time to cut back on non-essential spending. This means prioritising the activities you get most enjoyment out of, and spending less on those that aren’t offering you good value for money. Spending less on going out and buying new things isn’t easy – but not cutting back now might mean you’re in an even more difficult position later. Remember, if your budget is out of balance in the long-term you’ll end up with debts that could be expensive and may take a long time to clear.

4.   Generate extra cash where you can

Alternatively – or to complement cut-backs in your spending – you could consider new ways to increase your income. First and foremost, if you have savings and investments that you’re relying upon to generate part of your income, make sure they are performing as well as possible.

In addition, consider freelance work if your employment contract allows it. Are there ways you could use your skills to generate a little extra income by working in your spare time? You could also sell unwanted items via eBay, could consider renting out your spare room or could even sign up to rent out your car when it isn’t in use.

5.   Get debt help if your budget won't add up

If you’re still struggling to balance your budget after cutting back on spending and are concerned about the amount of money you owe, it’s important to seek help as soon as possible. Spending more than you earn each month isn’t sustainable in the long-term, and will push you further and further into debt.

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Focus on What Really Matters: YOURSELF

As we turn the corner from 2014 and enter 2015, many of us will use this moment to clear the decks and think about changes we want to implement personally and professionally in the year ahead.

To help everyone set their year up for success, here are ways you can keep the right level of focus on yourself in 2015.

1.   Set attainable goals

Set both near and long-term goals. If you think about where you want to be in six months, what do you need to do in the previous months to get there?  You can’t eat an entire steak with one bite. Goals are the same way. Give yourself a chance to make “bite-sized” progress. Share your goals with others and set check-ins to keep yourself honest. Provide plenty of transparency, so they can help motivate and calibrate your progress.

2.   Try to live in the present

If you can find a way to maximize each day across the things that matter most like family, health and work, you will find yourself in a happier, more productive, and more fulfilled state of mind.

Manage your day so you can make the most out of it. Set routines and give yourself the flexibility to live within a schedule. Give yourself more credit. Not every day will be perfect. Maybe you don’t have time to go on a five-mile run. If you can find time for a 30 minute walk instead, great. Give yourself credit for establishing good habits and behaviors.

3.   Make your health a priority

Think about the areas you really need to focus on. Perhaps it is diet, exercise or getting more sleep. The best thing you can do is to get educated. For example, don’t jump into a hardcore diet. Instead, try and meet with a nutritionist to develop a program that is tailored to you. Don’t try and do too much too soon. Doing so may create setbacks that not only hamper your progress but demotivate you.

4.   Leave behind negative influences

You know people who are negative, always complain, are overly skeptical and generally don’t support an ongoing positive attitude. Ignore them. Don’t spend your energy with them. Learn your triggers and deal with them. If you can zero in on your triggers, you can make immediate and impactful changes.

5.   Pace yourself and make all 365 days count

Leverage the seasons. For example, if you are focused on your health make the winter a time when you focus on diet. Leave the spring to get into running shape, so by summer you will be rolling. Think about the principles you want to reflect every day. Write them down and read them every day. If you can give yourself regular reminders, by the 365th day of 2015, you will have turned your desired changes into permanent ones. 

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Market Experiments

Unlike consumer clinics, which are conducted under strict laboratory conditions, market experiments are conducted in the actual marketplace. There are many different ways of performing market experiments. One method is to select several markets with similar socioeconomic characteristics, and change the commodity price in some markets or stores, packaging in other markets or stores, and the amount and type of promotion in still other markets or stores, and record the different responses (purchases) of consumers in the different markets. By using census data or surveys for various markets, a firm can also determine the effect of age, sex, level of education, income, family size, etc., on the demand for the commodity. Alternatively, the firm could change, one at a time, each of the determinants of demand under its control in a particular market over time and record consumers’ responses.

The advantage of market experiments is that they can be conducted on a large scale to ensure the validity of the results and consumers are not aware that they are part of an experiment. Market experiments also have serious disadvantages, however. One of these is that in order to keep costs down, the experiment is likely to be conducted on too limited a scale and over a fairly short period of time, so that inferences about the entire market and for a more extended period of time are questionable. Extraneous occurrences, such as a strike or unusually bad weather, may seriously bias the results in uncontrolled experiments. Competitors could try to sabotage the experiment by also changing prices and other determinants of demand under their control. They could also monitor the experiment and gain very useful information that the firm would prefer not to disclose. Finally, a firm may permanently lose customers in the process of raising prices in the market where it is experimenting with a high price.

Despite these shortcomings, market experiments may be very useful to a firm in determining its best pricing strategy and in testing different packaging, promotional campaigns, and product qualities. Market experiments are particularly useful in the process of introducing a different product, where no other data exist. They may also be very useful in verifying the results of the other statistical techniques used to estimate demand and in providing some of the data required for there other statistical techniques of demand estimation. 

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Consumer Clinics

Another approach to demand estimation is consumer clinics. These are laboratory experiments in which the participants are given a sum of money and asked to spend it in a simulated store to see how they react to changes in the commodity price, product packaging, displays, price of competing products, and other factors affecting demand. Participants in the experiment can be selected so as to closely represent the socioeconomic characteristics of the market of interest. Participants have an incentive to purchase the commodities they want the most because they are usually allowed to keep the goods purchased. Thus, consumer clinics are more realistic that consumer surveys. By being able to control the environment, consumer clinics also avoid the pitfall of actual market experiments (read the post here), which can be ruined by ruined by extraneous events.

Consumer clinics also have serious shortcomings, however. First, the results are questionable because participants know that they are in an artificial situation and that they are being observed. Therefore, they are not very likely to act normally, as they would in a real market situation. For example, suspecting that the researches might be interested in their reaction to price changes, participant are likely to show more sensitivity to price changes than in their everyday shopping. Second, the sample of participants must necessarily be small because of the high cost of running the experiment. Inferring, however, a market behavior from the results of an experiment based on a very small sample can be dangerous. Despite these disadvantages, consumer clinics can provide useful information about the demand for the firm’s product, particularly if consumer clinics are supplemented with consumer surveys. 

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Consumer Surveys and Observational Research

Consumer Surveys involve questioning a sample of consumers about how they would respond to particular changes in the price of the commodity, incomes, the price of related commodities, advertising expenditures, credit incentives, and other determinants of demand. These surveys can be conducted by simply stopping and questioning people at a shopping center or by administering sophisticated questionnaires to a carefully constructed representative sample of consumers by trained interviewers.

In theory, consumer questionnaires can provide a great deal of useful information to the firm. In fact, they are often very biased because consumers are either unable or unwilling to provide accurate answers. For example, do you know how much your monthly beer consumption would change if the price of beer rose by 10 cents per 12-oz can or bottle? If the price of sodas fell by 5 cents? If your income rose by 20 percent? If a beer producer doubled its advertising expenditures? If the alcoholic content of beer were reduced by 1 percentage point? Even if you tried to answer these questions as accurately as possible, your reaction might be entirely different if actually faced with any of the above situations. Sometimes consumers provide a response that they deem more socially acceptable rather than disclose their true preferences. For example, no one would like to admit that he or she drinks 200 beers per month. Depending on the size of the sample and the elaborateness of the analysis, consumer surveys can also be expensive.

Because of the shortcomings of consumer surveys, many firms are supplementing or supplanting consumer surveys with observational research. This refers to the gathering of information on consumer preferences by watching them buying and using products. For example, observational research has led some automakers to conclude that many people think of their cars as art objects that are on display whenever they drive them. Observational research has also shown that consumer prefer to take several cold medicines, not just one. Observational research relies on product scanners which are increasingly found in stores and on people meters in homes. These make it possible for a company to learn overnight how a wide variety of products sell, the effectiveness of commercials, as well as television viewing patterns. Scanners and people meters, however, raise legal questions about privacy.

Observational research does not, however, render consumer surveys useless. Sometimes consumer surveys are the only way to obtain information about possible consumers’ responses. For example, If a firm is thinking of introducing a new product or changing the quality of an existing one, the only way that the firm can test consumer’s reactions is to directly ask them since no other data are available. From the survey, the researcher then typically tries to determine the demographic characteristics (age, sex, education, income, family size) of consumers who are most likely to purchase the product. The same may be true in detecting changes in consumer tastes and preferences and in determining consumers’ expectations about future prices and business conditions. Consumer surveys can also be useful in detecting consumers’ awareness of an advertising campaign by the firm. Furthermore, if the survey shows that consumers are unaware of price differences between the firm’s product and competitive products, this may be a good indication that the demand for the firm’s product is price inelastic. 

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Marketing Research Approaches to Demand Estimation

Marketing research is the process that links the consumers, customers, and end users to the marketer through information — information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.

Researching your market helps you target your ideal customer, identify new market opportunities and improve your sales performance. Successful businesses make regular market research the foundation of their marketing and sales planning. You can develop strong marketing strategies based on what you find out about your products and services, your customers, your competitors, your industry and the challenges in your marketplace.

Market research can also help you identify areas of your business that could be updated or changed. It's important to clearly define your market research goals so that you can give yourself the best chance of finding accurate and useful results.

The result of marketing result can be used for some business or sales planning, one of them is to demand estimation. Marketing research approaches is used as a method of estimating demand. The most important of these are consumer surveys, consumer clinics, and market experiments. I will explain them in different posts.

To learn more about these methods click the title below:

·      Consumer Surveys and Observational Research

·      Consumer Clinics

·      Market Experiments

I briefly examine these methods and point out their advantages and disadvantages and the conditions under which they might be useful to managers and economists. 

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Daily Habits That Will Make 2015 Explosive

The New Year is here!  Many of you may want to ramp up your personal development and productivity to a whole new level to reach some major goals. To truly find success in your life, it is important that you take the time to do the little things that matter most. Small changes to your daily routine can translate into monumental success in all of your endeavors.

Here are daily habits that you should be doing:

1.   Get up early

When you get up early, before most people, you have a quiet and relaxing time to get things done. Imagine being able to sit down and go through emails or handle daily tasks without your message notification buzzing. By getting up early, you are not only giving yourself some extra time in the morning, but you are giving yourself some extra valuable time that will allow you to get even more done.

2.   Read

You should be reading every single day. This doesn’t necessarily mean crushing an entire novel in a few hours, but put aside a little time to read, preferably 20 to 30 minutes. When you read you help stimulate your thought processes, and may be surprised by the ideas that you come up with. Reading things such as magazines or newspapers can also help you stay abreast of the world around you, a trait that can only be helpful, no matter what industry you work in.

3.   Exercise

Even if it is just for 30 minutes, it is important to start exercising daily. Exercise can help release endorphins that can naturally boost your mood and your energy levels. Not only will you feel happier and more energized but those who work out regularly report lower levels of stress.

4.   Practice gratitude

This can be a hard one for some people and it’s something that unfortunately many of us need to consciously practice. When our lives get consumed with work and personal demands it can be hard to remember to show gratitude to those that we interact with. Try to make a conscious effort to practice this.

5.   Schedule your day before it starts

Having a set schedule is a powerful tool when it comes to making the most of your day and being as productive as possible. To have the biggest impact with your time, try making your schedule the day before. This way the moment you wake up you will know just what is ahead.

6.   Focus on high-priority tasks first

No matter what the reasoning is, challenge yourself by starting with focusing on your high-priority task. Get it done first and then focus on smaller things. After being in the mindset of tackling a high-priority project, your less demanding tasks will be easier to complete. It's a small change but one that can improve your effectiveness drastically.

7.   Always go the extra mile

Do a few extra (meaningful) tasks every day that go beyond what your actual requirements are. By putting in a little more effort than required you can start getting the attention of your superiors or clients, get more done during the workday and feel a new energizing sense of motivation and satisfaction.

8.   Improve in one area each day

This area can be something small or large and it can be in your personal or professional life, but make it a goal to improve in one area of your life every day. No matter what it is, take the time to really try to improve one small thing, and before you know it the improvements in your personal and professional life will surprise you.

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