Budgets

Budget is defined as a plan for your finances. Basically, what you expect to spend and earn over a fixed period of time. Good budgeting is being able to forecast accurate spending and earning. Creating, monitoring, and managing a budget does not need to be complicated but it does need to be done. Most businesses have a timetable set by their finance department for when budgets are submitted. 

In budgeting you will have these questions to ask and answer: What are the Projected Sales for the budget period, Direct Costs, Fixed Costs/Overheads, Staff Costs, and other costs. In an organisation most of these costs are essential. It’s always easy to create a budget if you have figures as a reference but only use them as a guide of costs and revenue. Hopefully you can get other historical information on sales so you can start putting together an accurate forecast of future sales and costs. 

Remember, to be realistic and keep a record of the predictions that you make. Budget predictions are vital when forecasting. When you involve this in your budget plan the more it gives you a guide to meeting your targets. That will help you to monitor the key drivers of your business such as sales, costs, and working capital more effectively. 

Once the session is completed, you will be able to define the meaning of budget, identify the elements under budgets that need to be considered and adopt strategies that will help you in managing budget effectively. 

Learning Objectives:

●    Define the meaning of budget.

●    Identify the elements under budgets that need to be considered; and

●    Adopt strategies that will help you in managing budget effectively.