Budget is an estimate of income and expenses for a particular period of time. It is also a projection of the financial requirements and consequences of a plan (Siegel & Yacht, 2009). There are different types of budgets, comprising of various components. Each of these components serves different purposes and are related to one another. In order to make better personal financial decisions, financial tools are required. All these will be discussed in this essay.
The two main types of a budget are comprehensive budget and specialize budget. A comprehensive budget is a type of budget that includes all aspect of our financial life. It consists of operating budget and capital budget. Operating budget is an estimate that shows our recurring income and expenses. Such budget is related to our short-term goals. Examples of recurring expenses and income include, living expenses and incomes from wages, salary, dividend, and interest. The purpose of operating budget is to serve as a financial tool to manage choices in achieving our short-term goals. This is because our “recurring incomes and
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According to Siegel & Yatch (2009), a specialized budget is included in the comprehensive budget as it is part of the total financial activities. Thus, the relationship between the specialize and comprehensive budget is that all estimates and expenses in the special budget are also found in the comprehensive budget. For example, cash flow budget which is a type of specialize budget is created from the comprehensive budget. (Siegel & Yacht (2009), stated that one can create a cash flow budget for an asset or activity by segregating its income and expenses from the comprehensive budget. This way, specialize budget can be prepared using the income and expenses that are segregated from the comprehensive budget. This will make it easier to project the outcome of choices on that assets or
Operating budgets are budgets that deal mainly with the day-to-day operations of a facility. This may include wages, utilities, rent, and items purchased that have the intent of lasting less than a year (Johnston, n.d). This type budget provides the needed information regarding the cash on hand needed to operate the facility during a fiscal year. Capital expenditure budgets deal with more long term items such as equipment or property. As stated by Johnston (n.d.), it is necessary to have a capital budget for continued growth of the business. You complete this task by purchasing assets that produce an income. Capital expenditure budget have the potential to cover a five- to ten-year period (Baker & Baker, 2014, p.174). Items included in the capital expenditure budget may also include loan interest and bondholder's interest. The operating budget and the capital expenditure budget interact with one another. To demonstrate an example: a healthcare facility purchases a chemistry analyzer for its clinical laboratory. The chemistry analyzer is placed in the capital expenditure budget, but the maintenance for the analyzer is placed in the operational budget. The capital expenditure expense is the chemistry analyzer, but the materials used to maintain the chemistry analyzer are operational expense.
Budgeting is a familiar term to most American families. Dictionary.com defines budgeting as an estimate, often itemized, of expected income and expense for a given period in the future. In order to avoid debt, bankruptcy, or overspending it is common to create a spreadsheet of some sort tracking your spending and income. On a grander scheme, the Unites States has to budget as well.
The budget process, according to Marshall, is to "develop and communicate" how an organization' economic, industry, and organizational strategies will be effected within the budgeted time frame. (p.497) People within the organization from planners, economists, and managers contribute facets of the strategic budget process in order to meet organizational needs. Upper management then typically approves those budgets. The operating budget is the forecast of activity that encompasses the results of the budget ...
Thomas Jefferson once stated, "I place economy among the first and most important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt" (Bussing-Burks, 7). A lot has changed since Jefferson was President two hundred years ago, but the need to be financially solvent is something that will always be necessary for the United States to maintain its leadership position in the world. The United States of America currently owes $16.7 trillion in debt primarily as a result of the government’s spending practices during the last ten years. Two wars, several fiscal collapses, the bursting of the bubble in the housing market, looming medical care costs from an expanded healthcare access law, and a recession may be the scapegoats, but the real issue is fiscal irresponsibility by the parties in power (Hiber, 76). One idea that has been discussed not only in Congress, but also on prime time news networks is the passage of a Balanced Budget Amendment, which would require that Congress balances the country’s budget every fiscal year (American Government, 1). A Balanced Budget Amendment could provide an exception for times of war, national emergency, or recession, or allow the legislature to suspend the rule by a supermajority vote (Lee, 2). A balanced budget is critical because budget deficits can only be funded by additional increases in the level of the national debt, which can place an undue burden on future generations to repay such debt, create annual interest costs that consume an increasing portion of tax revenues and crowd out spending on current programs, and result in potential reliance on other countries in order to make financial ends meet.
The federal budget is known as the notorious economic tank from which money is distributed to various programs. The money used every fiscal year, which begins October 1st and ends September 30th the next year, belongs to the people. The government raises this money through taxes and they spend it on national defense, Medicare, and social security. The federal budget is an exercise in making choices, and those options will certainly affect individuals living in the U.S. These choices cause debt to pile up on the government, who is struggling to make it disappear. The deficit and debt of a government gauges how well it is being run and how well it has been run in the past. According to The Economist the national debt is the total outstanding borrowing of a country’s government; it is an accumulation of deficits that has yet to be paid off (Economist, A-Z). The current U.S. federal deficit, as of the 2013 fiscal year, is a monumental $680 billion dollars, adding to an even higher debt. Any attempt to diminish this debt has the consumer footing the bill, but there has to be a different way. There have been requests to increase taxes, to raise revenues for transportation infrastructure, to restrategize the military force or to make defense more affordable (“15 Ways to Rethink the Federal Budget”, Brookings).
Budgets has been widely used by a lot of organizations since it was first introduced, because it can helps managers to properly plan and control the business’s resources. Successful control mechanisms as Schick believes are the essential to budgetary development (Gray, Jenkins, and Segsworth, 2002, p.11). However, recently the use of budgets to control organizations has been the subject to criticise and debate (Hansen et al., 2003 cited in Libby and Lindsay, 2010). In this era that full of unpredictable environments has make it even harder for a business to achieve the targets set in the budgets. In fact, European surveys also reported that there has been a growing dissatisfaction among organizations about their budgeting system (Neely et al.,
The department of Developmental Education is tasked each year with coming up with the following years budget and this year I was given that task. The Dean has given us a very hard task and that is that we have to cut 10% of our budget for next year. My task is to come up with five strategies that help in reducing our budget by 10% just for the following year, two of them will have to present a permanent change to our current budget and the ones to follow. This was a very tough decision, as many items have to be considered. I have given it a lot of thought and this is what I came up with, I will also explain which one of the strategies I think works best for our department and the institution.
The capital budget includes all long term acquisitions. It is continuing and multi-year. It is used when assets, equipment such as vital signs machines, are purchased or invested to the departments. The operating budget includes department daily needs, personnel, and supplies. It is for a period of a year.
Quantitative plans are called budgets. Budgets are prepared to impose cost controls on the activities of an organization (Chenhall, 1986).Budgets are then used to evaluate the performance of the management and budget itself is considered as a standard to evaluate the performance Solomon, 1956). The purpose of the budget is also to implement the strategy of the organization and communicate it to the employees of the organization Rickards (2006). The change in the external environment has led to the change in the budgeting approaches from the initial cash based budgets to the zerio based budgets (Bovaird, 2007).
Making a personal budget can be a very simple or a very arduous task, depending on how one goes about it. One must find stable monthly expenses, such as rent, and manage the rest of their income around that amount. Depending on the steps an individual takes, this can be a very simple process. For this project, I was assigned to make three personal budgets for three different situations. This paper will outline the first.
Balance the Budget Balancing the budget for the United States is a challenge for policymakers because there are very difficult decisions that must be made that can directly affect United States citizens. After completing the simulator for balancing the budget, I now realize the difficulty that is associated with balancing the budget. The decisions are difficult because no matter what cuts you are making the budget your decision is going to deprive a group of people or an agency of essential funds to their existence. Raising taxes, while trying to balance the budget, creates a problem because the ramifications of these taxes can also affect specific groups.
A budget is a guide for a nonprofit organization and it helps to plan the future goals and the current financial position of the organization. It is important to check the financials and budget review periodically because it is necessary to determine the actual going out and coming in of money. 4. KiDZ ROCK OUT Long-Term Goals: 4.1 Long-Term
Budgeting is the ability to track income against expenses in order to facilitate a sensible decision making processes to preference spending appropriately and responsibly (McLaughlin, 2016). Budgeting of funds should be a written plan or spreadsheet to physically manage spending to reach preestablished goals, prepare for emergencies and prevent overspending. Strategic planning allows for flexibility to forecaste and adjust the budget as one’s economic situation changes. Facilitated management of the budget allows for the proper handling, directive and control of the finances to ensure one remains on track. Project communication of the budget allows vision and mission to evolve into fruition inviting ideas and strategies to attract potential
To expand on this part further, operating budget’s comprises of living income/expenses, loan payments, savings/investment deposits. You can run your life with these properly in place without any interruption, but what do you do with your savings/ investment deposits? The capital budget is there for planning to channel our investments by purchasing assets which boost our income even
A personal budget and is a way for individuals to show and analyze spending habits, save money and develop a plan. Set up guidelines and goals to reduce over spending to be successful saving money. Decide what is necessary and what is nonessential to survival and personal growth. Achieve good credit as a habit, which will save or lower interest rates on purchases. To budget payments to stay below net income is essential.