Both the individual and the business concern possess a certain income from which living or supporting expenses must be drawn; therefore, to both the individual and the business concern comes the question of how much of the income may properly be utilized for non-paying purposes, such as pleasure in the case of the individual and dividends in the case of the business concern.

At the beginning of each year the individual should estimate his needs. The business establishment should, in like manner, determine what amount of earnings should be set aside for a reserve, what should be applied to each department for maintenance, depreciation, etc., and whether an increase or curtailment of income may be expected. Item by item, this estimate should be scrutinized to learn where an outlay may be profitably curtailed, or where an outlay may be made for ultimate benefit. Such a proceeding is a practical method of planning finances; it can, and should be, consistently followed.