hat is Budget?

A budget is a list of all planned expenses and revenues. It is a plan for saving and
spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate
the trade-offs between two or more goods. In other terms, a budget is an organizational plan stated
in monetary terms.In summary, the purpose of budgeting is to:Provide a forecast of revenues and
expenditures, that is, construct a model of how our business might perform financially if certain
strategies, events and plans are carried out.Enable the actual financial operation of the business to
be measured against the forecast.

5  Types of Budget Budget types

Sales budget: The sales budget is an estimate of future sales, often broken down into both units and
dollars. It is used to create company sales goals.Production budget: Product oriented companies
create a production budget which estimates the number of units that must be manufactured to meet
the sales goals. The production budget also estimates the various costs involved with manufacturing
those units, including labor and material.Cash Flow/Cash budget: The cash flow budget is a
prediction of future cash receipts and expenditures for a particular time period. It usually covers a
period in the short term future. The cash flow budget helps the business determine when income will
be sufficient to cover expenses and when the company will need to seek outside financing.Marketing
budget: The marketing budget is an estimate of the funds needed for promotion, advertising, and
public relations in order to market the product or service.

6  4. Marketing budget: The marketing budget is an estimate of the funds needed for promotion,
advertising, and public relations in order to market the product or service.5. Project budget: The
project budget is a prediction of the costs associated with a particular company project. These costs
include labor, materials, and other related expenses. The project budget is often broken down into
specific tasks, with task budgets assigned to each.6. Revenue budget: The Revenue Budget
consists of revenue receipts of government and the expenditure met from these revenues. Tax
revenues are made up of taxes and other duties that the government levies.7. Expenditure budget: A
budget type which include of spending data items.

7  What is Personal Budget?

A personal budget is a finance plan that allocates future personal income towards
expenses, savings an debt repayment. Past spending and personal debt are considered when
creating a personal budget. There are several methods and tools available for creating, using and
adjusting a personal budget.

8  Tools used for creating a personal budget

Several tools are helpful for constructing a personal budget. Regardless of the tool used, a budget's
accuracy is only as good as the accuracy of the updated budget data; an old budget that does not
reflect actual income or expenses is of little use to a current budget. Computer generated budgets
have become commonly used as they replace the need to rewrite and recalculate the budget every
time there is a change.Pencil and paperA simple budget can be written on a piece of a paper with a
pencil, and optionally, a calculator. Such budgets can be organized in three-ring binders or a file
cabinet. Simpler still are the pre-formatted household budgeting or bookkeeping forms that creates a
budget by filling in the blanks.Spreadsheet softwareSpreadsheet software, including Microsoft
Excel, iWork Numbers  or OpenOffice.org Calc, helps to arrange budgets according to need and
performs calculations easily with rudimentary formulas. For example, budget spreadsheets are used
to keep track of income and expenses. The major reason most people discontinue using budget
spreadsheets that don't offer date-shifting is that the information needs to be reentered or moved at
the end of each month. Spreadsheets are still excellent for complex budgets and planning.
9  Money-management software
Some software is written specifically for money management. Products such as Fortora Fresh
Finance, Money dance, Quicken, Microsoft Money (discontinued), and Gnu Cash are designed to
keep track of individual account information, such as checking, savings or money-market accounts.
These programs can categorize past expenses and display monthly reports that are useful for
budgeting future months.Money-management websitesSeveral websites, such
as Mint.com and Thrive, have been devised to help manage personal finances. Some may have
a privacy policy governing the use and sharing of supplied financial information.Spending-
management softwareSpending-management software is a variation of money-management
software. Unlike typical budgeting that allocates future personal income towards expenses, savings
and debt repayment, this type of software utilizes a known amount of money, the cash on hand, to
give the user information regarding what's left to spend in the current month. This method eliminates
some of the guess work associated with forecasting what a person might receive for income when it
comes to allocating budgeted money. Like money-management software, some spending-
management software packages can connect to online bank accounts in order to retrieve a current
status report.

10  Following a BudgetOnce a budget is constructed and the proper amounts are allocated to their
proper categories, the focus for personal budgeting turns to following the budget. As with allocation,
there are various methods available for following a budget.EnvelopesEnvelope Accounting or the  is
a method of budgeting where on a regular basis (i.e. monthly, biweekly, etc.) a certain amount of
money is set aside for a specific purpose, or category, in an envelope marked for that purpose. Then
anytime you make a purchase you look in the envelope for the type of purchase being considered to
see if there are sufficient funds to make the purchase. If the money is there, all is well. Otherwise,
you have three options: 1) you do not make the purchase; 2) you wait until you can allocate more
money to that envelope; 3) you sacrifice another category by moving money from its associated
envelope. The flip side is true as well, if you do not spend everything in the envelope this month then
the next allocation adds to what is already there resulting in more money for the next
month.With envelope budgeting, the amount of money left to spend in a given category can be
calculated at any time by counting the money in the envelope. Optionally, each envelope can be
marked with the amount due each month (if a bill is known ahead of time) and the due date for the
bill.

11  Spreadsheet budgeting with date-shifting

Budget spreadsheets with date-shifting, like Budget-Master.com, typically offer a detailed view of a
12 month, income and expense, plan. A good way to follow and manage a budget when using a
spreadsheet that offers date-shifting is to set the current month a few months before the current
month along the 12-month cycle.Quinn-COThe Quinn-CO method of budgeting is based on a
Canadian business model where categories of expenses are set up as cost centres. Cost centres
are broken out into three categories of spending: fixed expenses, variable expenses and savings.
Cost centre targets are based on percentages of monthly net revenue (household gross income
minus taxation and employee deductions). All expenses are allocated to appropriate cost centres
based on a set of business rules outlined in the book Wake Up or Die Poor The ratio of fixed
expenses to variable expenses to savings make up a family's pie. When fixed expenses make up
more than 50% of a household's net revenue, That-CO is in the "prickly" pie.