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:
- A budget should always give a comparative statement of income raised and expenditure incurred during the previous years.
- 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.
- The budget should should always be realistic, accurate and consrevative.
- The cost of fund raising should be minimum
- Income & expenditure side should always be balanced by showing deficit or surplus.
- 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:
- Average of income/expenditure during the last three years
- Actual income/expenditure during the last year budgeted income/expenditure during the last year
- proposed income/expenditure during the previous year
- proposed income/expenditure for the next year