Budgeting for Financial Planning

Budget is a complete financial forecast based on available data, about the financial condition of the agency during the coming year.Budgeting is a subject matter which is a core part of financial planning in the programme activities of a project. It guide the agency member about the manner of spending money on various schemes and heads of account. It is a basis means of controlling the programmes as well as the funds.

Principles of Budgeting:

1. A budget should always give a comparative statement of income raised and expenditure incurred during the previous years.
2. The budget should relate to a particular period of 12 months, by fiscal or calender year. Each agency follows a different year for the purposes of preparation of its budget and complication of accounts. Mostly in the year April or December.
3. The budget should should always be realistic, accurate and consrevative.
4. The cost of fund raising should be minimum
5. Income & expenditure side should always be balanced by showing deficit or surplus.
6. The budget should also provide for the additional amount necessary for giving increments or for new appointment.

Purpose of the Budgeting:

• To assess the financial requirement of an agency
• Starting a fund-raising campaign
• Requesting various grant giving bodies for financial assistance
• To indicate the lines on which money raised or received will be spent
• To guide the staff of the agency about the manner of spending money on various schemes and heads of account

Method of Budgeting:

1. Average of income/expenditure during the last three years
2. Actual income/expenditure during the last year budgeted income/expenditure during the last year
3. proposed income/expenditure during the previous year
4. proposed income/expenditure for the next year