Budget remaining at the end of the year available only to complete the goal

Budget remaining at the end of the year? What happens then? First, understand what a budget is not. It is not a bucket to accumulate funds for various activities. Nor is it a straitjacket, nor is it a plan to show what we cannot do. A budget is a highly targeted tool designed to accomplish specific goals. It is our best estimate of time, talents, and money to achieve particular goals. I repeat; Budgeting is not money to be spent irresponsibly as we approach the end of the year.

We budget to try to make sure we have the resources to meet our goals in the budget period (usually one year). We do not focus on the budget being isolated at any time. Instead, we look holistically at the goal and the resources required to complete it.

When we budget, we start with goals and then calculate the resources we need to achieve these goals: time, skills, and money. Once we complete the objectives, the budget expires, even if we have a remaining budget. This is the only way to prevent silos and promote efficient use of resources.

Budget remaining after completing objectives Needs to reallocate

After completing our goals by the end of the year, we shouldn’t be lavish like governments and find creative ways to waste the remaining budget. When we achieve the objective (or goals), we do not spend overestimated funds. We do not know the future, so it is reasonable that we have not budgeted correctly. “Return funds” to the “core group” for optimization in the organization. Conversely, when we underestimate, we must re-examine our goals and, as necessary, request additional funding or change goals to stay on budget.

One of the reasons governments waste our tax money is that they focus solely on money (the size of budgets) rather than goals and programs and the best ways to deliver them. Another reason is that they get away with this practice, and we expect governments to be wasteful and inept.

When budgeting, we must select the best path to the goal sinceidentify potential gaps and opportunitiesthat may arise during the budget period. This approach is obvious, but many people don’t. Either they don’t prepare a budget or they do it after starting their travels. Alternatively, they focus on money regardless of their goals. Thorough budgeting prior to the event allows us to examine alternatives to show probable ways to handle potential gaps and opportunities.

Budgeting is about putting together the budget: choosing the plan and methodically estimating and recording its cost to achieve a specific goal or goals. It’s writing the roadmap and money map, PEACE Budget Control planning and evaluation, counting the cost before acting.

Budgeting is an iterative process

The budget is iterative. We need to go through a few cycles to prune projects and trim tasks to reduce expenses to disposable income. This procedure is standard and the only way to be debt free with a fixed income. Don’t cut costs (especially in general). Cutting schedules and tasks and their associated costs will disappear. When we cut costs, we do not focus on the goals (programs and functions) and therefore we will underfund some and overfund others. Additionally, irrational cost cutting encourages games in which people present high budgets knowing that the administration will cut them. As a former CFO, I saw those games that don’t benefit the overall organization.

It should be obvious why we should budget. Still, I will repeat it. We budget before a planned event to see if we will have sufficient funds to meet our goals. Don’t just look at what was spent in the past and increase that number to get a budget. Instead, first decide on your budget period objectives. Only after completing the development of the objectives do we cost them?

Budgeting example

Suppose you plan to go to Vancouver (your goal) and you estimate the cost at $ 500 (budget), but you only have $ 300. You would start your trip if you thought you could reduce the estimate to $ 300. Then you would consider different alternatives such as:

  1. Taking the train
  2. Shortening the stay
  3. Invite a friend to share expenses
  4. Other options

A realistic budget will reduce your stress and show possible paths to your goal. You do not know the future, which will probably change with respect to your budget. So you probably won’t hit the budget unless you take a flexible budgeting approach.

Suppose you started the trip to Vancouver without a budget and spent all your funds before the end. After starting your trip, you lose some of the options available to you to cut costs. During the trip, insufficient funds would force him to choose between current alternatives. When you budget before you start your trip, you have more alternative solutions to choose from.

Not budgeting and then spending all your money halfway through would challenge you. Your stress would increase and you and your spouse would argue. Also, you would need to change the goal or plan:

  1. Go home and don’t go to Vancouver.
  2. Go to Vancouver but stay fewer days, or stay in cheaper places or with lower budgets for items like food, sightseeing, etc.
  3. You can end the trip with borrowed funds.

Often times, people and companies say they prepare budgets but do not make a profit. I’m not surprised. Start a budget
Budgetary Control of PAZ (PAZ);It is not the end, but part of that procedure. When you budget, you make a profit only if you follow both elements of
PEACE,budget and control.

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