Industry jargon not your thing? Our glossary will enlighten you!
A budget is a financial plan that forecasts and allocates income and expenses over a specific period of time. It is a critical tool in almost all areas - from personal finance to business to government - and helps control spending, achieve financial goals and ensure long-term stability.
Income and expenditure: A budget lists all expected income and expenditure to provide a clear overview of the financial situation.
Planning and forecasting: Budgets are used to plan future financial activities and can help to identify potential bottlenecks or surpluses.
Control and management: A budget can be used to control expenditure and manage financial resources efficiently.
Personal budget: This is the management of personal finances, including income, expenses, savings and investments.
Corporate budget: In businesses, a budget is used to plan and monitor operating costs, salaries, marketing, development and other business expenses.
Public budget: Governments and public institutions use budgets to manage revenues (such as taxes) and expenditures (such as infrastructure investments, education and social services).
Objectives: Definition of clear financial objectives to be achieved with the budget.
Analysis of finances: Reviewing the current financial situation to understand income and regular expenditure.
Preparation of the budget: Allocating amounts to different items based on priorities and objectives.
Monitoring and adjustment: Regularly reviewing the budget to ensure it is being adhered to and making adjustments as the financial situation changes.
Unforeseen expenses: Unexpected expenses can lead to deviations from the budget.
Adherence to budget: Sticking to a budget requires discipline and can be a challenge, especially with strict or tight budgets.
Changes in income or expenditure: Significant changes in financial circumstances require an adjustment to the budget.
In business, the budget is a fundamental tool for financial management. It enables companies to allocate their resources effectively, minimize financial risks and make strategic decisions based on clear financial data.
A budget should be reviewed regularly, ideally monthly, and adjusted if necessary to ensure that it remains realistic and on target.