Budgeting,Saving and Spending.

''A budget isn't about restricting what you can spend. It gives you permission to spend without guilt or regret.''

Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. Budgeting is simply balancing your expenses with your income.

Budgeting is the most fundamental and useful tool for managing your money. Many individuals avoid doing it as they think it would prevent them from spending and enjoying. However, budgeting does not stop you from enjoying stuff; in fact, it ensures that you enjoy stuff when you want it. Following are other reasons why budgeting is significant.

If you are in the dark about how much money you spend and where you spend it, then changing your habits will be difficult. Even if you are financially comfortable, a budget can help you identify nonessential expenditures and figure out ways to redirect funds towards your priorities. For instance, if you do not realize you spend #20,000 per month on clothes, it will be tough to break that habit and utilize that money toward a priority. Most importantly, if you are trying to get out of debt, it is essential to budget your limited funds so that debt payoff becomes your priority.

To cut back on expenses, you need to see where your money is going so that you can restrict yourself to a specific amount per spending category and utilize a method, such as an envelope budgeting system, to make sure you do not overspend. 

Additionally, you should research ways to save on groceries, monthly utility bills, and TV and internet services. If you still have a budget shortage, go for more aggressive cutbacks such as cutting out cable entirely or find ideas to generate extra income in your spare time.

If you do not have a budget, there is no way you can know if you can afford a new car, new flat-screen TV, or any other significant purchase. In fact, if your finances are one great mystery, your mere desire to buy an item might justify the expense. Even if the object of your desire is currently out of reach, you can budget for it. Besides, it is never harmful to have a little extra money in your emergency fund, and budgeting can help you save more so that you can sock away extra cash for a rainy day.

Creating and following a budget involves sacrifice and self-discipline. The sacrifice is worth it as it will help you develop wise spending habits to manage your finances more efficiently now as well as in the future. You should keep your budget current by updating it regularly to reflect changes in your situation such as a marriage, new home or raise.

5 Types of Budgets for Businesses.

Budgets help businesses track and manage their resources. Businesses use a variety of budgets to measure their spending and develop effective strategies for maximizing their assets and revenues. The following types of budgets are commonly used by businesses.

• Master Budget

A master budget is an aggregate of a company's individual budgets designed to present a complete picture of its financial activity and health. The master budget combines factors like sales, operating expenses, assets, and income streams to allow companies to establish goals and evaluate their overall performance, as well as that of individual cost centers within the organization. Master budgets are often used in larger companies to keep all individual managers aligned.

• Operating Budget

An operating budget is a forecast and analysis of projected income and expenses over the course of a specified time period. To create an accurate picture, operating budgets must account for factors such as sales, production, labor costs, materials costs, overhead, manufacturing costs, and administrative expenses. Operating budgets are generally created on a weekly, monthly, or yearly basis. A manager might compare these reports month after month to see if a company is overspending on supplies.

• Cash Flow Budget

A cash flow budget is a means of projecting how and when cash comes in and flows out of a business within a specified time period. It can be useful in helping a company determine whether it's managing its cash wisely. Cash flow budgets consider factors such as accounts payable and accounts receivable to assess whether a company has ample cash on hand to continue operating, the extent to which it is using its cash productively, and its likelihood of generating cash in the near future. A construction company, for example, might use its cash flow budget to determine whether it can start a new building project before getting paid for the work it has in progress.

• Financial Budget

A financial budget presents a company's strategy for managing its assets, cash flow, income, and expenses. A financial budget is used to establish a picture of a company's financial health and present a comprehensive overview of its spending relative to revenues from core operations. A software company, for instance, might use its financial budget to determine its value in the context of a public stock offering or merger.

• Static Budget

A static budget is a fixed budget that remains unaltered regardless of changes in factors such as sales volume or revenue. A plumbing supply company, for example, might have a static budget in place each year for warehousing and storage, regardless of how much inventory it moves in and out due to increased or decreased sales.

"A budget is telling your money where to go instead of wondering where it went."