Typically, a budget is created by asking each department head to provide a list of their needs for the upcoming fiscal year. People frequently request more things than are accessible in total, as is always the case. The Budget Committee is consequently forced to decide what it deems vital and what it deems to be less necessary. In other words, individuals must make a distinction between wants and needs.
Budgets: how are they created?
- Thread starter Shavkat
- Start date
Creating a budget requires distinguishing between wants and needs and prioritizing essential expenses its important to consult with each department head to determine their needs and make informed decisions about what is necessary and what can be cut.
Before one can create a budget, it's important to determine the source of money. A budget is merely the draft of the picture, once you have the money then you start putting the colors. One cannot spend the budget without the money. Plainly saying the budget is just the plan of expenditure.
Yes I totally agree with you. In addition, the budget must also be realistically adjusted to the income they earn, so that there are no more expenses than income. Soon it will go bankrupt. Actually, if you want to simplify your desires, it won't cost you much and you can save money.
Most important is set a budget for basic. necessities. For household budget it's normally for rent or. mortgage if one does not own the home, budget for transportation, food, clothing may be adjusted, put something for medical and health. Travels, recreation may be adjusted. Some househols need to allocate for education.
I do not have any idea how budget is created. All I know in the university where I work, the budget for a salaries derive from the national government. Others from the local government from peoples taxes and other revenues.
If you work in a company, it's actually not important to know how the budget is made, it's none of your business. Unless you work in finance who needs to take care of it all. The most important thing is that you receive a good salary every month. LOL
Every company have resources that they use to run their day-to-day activities and it's exactly what the companies make budget on. They made provision for such in order for work to keep on going.
- Thread starter
- #11
You are right that every department in a company needs to show their expenses in a timely manner. In this way, they can able to cut-down some unneccessary expenses. It is a part of budgeting in cutting-down certain things in a company.
Post automatically merged:
I do think that some companies would not ask the staff to give input with the budget per se. The budget is based on their business feasibility study prior to the operation of the company.
The first step is drafting a budget is to determine how much is available for the expenditure and how much will be borrowed. Through this process, budget committee will determine the likely total expenditure and set a benchmark. The second step is to determine want and need of the organisation.
