Budgeting

What is a budget?

A budget is a allocation of money (or resource) needed and managed to undertake a particular task. It may be over a specific task (a project) or a time period (a holiday).

A budget is a proposed idea for a specific amount that has to last you through the task, during the task there will be another figure known as the the actual amount which is the actual amount spent compared to the budget plan. Both figures will be compared to get a cumulative variance which will be used to see if money was saved or if the spent amount went over. 

Example: There is a budget of £100, the actual amount spent was £102 so the cumulative variance is -£2.

Tips using budgeting

Budgets are meant to be a supply of information on the real use of resources. Over time, this information is used to improve future budgets because the more budgets are used the better the understanding is of using them.

If you have a really big budget to spend in a company always take 10% out to save for insurance if things go wrong.

Keep a close eye on the budget list plan when purchases go through because the actual cost may be different by the time purchasing goes through, this will need editing on the budget list to keep up to date.