Question

What similarities do you think there are between personal budgeting and budgeting for organizations?

If you have had experience with budgeting, what did you learn from that experience? What were some challenges you faced?​

Answer 1

Similarities between Personal Budgeting and Budgeting for organisation =>

In layman language, Budgeting baiscially is process of planning of expenditures.

Idea is to take stock of current financial situation, expected needs and dedicating sources on how to meet needs. To see if sources fall short then how to prioritize the use of resources and fulfiil tasks.

Personal Budgeting includes checking own finances , availability, sources of funds, and costs involved and application of funds and allocation of the same.

It may include planning for party , travel , marriage, retirement plans, etc.

Budgeting for organisation includes seeing costs of funds involved, comparing various source of funds vis a vis costs for the organisation and naturally on a larger scale than personal budgeting as the number of stakeholders, scale of operations are more.

Budgeting may be of different types :

Statis & Flexible Budgets

Material Budget,Labour Hours budget, Costing Budget , Sales Budget, Cash Flor Budget, Investment Budget,

Like wise , In organisation - it is sensitive to meet long term goals via long term budgets.

Splitting the long term budgets we get medium term budget and short term budget.

Similarities between personal budgeting and budgeting for organisation :=>

1. Meeting goals

2. Priortizing goals by allocation in order of scarcity

3. Time bound - Budget is made for a period

4. FInding variances from actuals and budgeted figures. Knowing reasons behind the variances.

5.

My learnings from Budgeting experience

1. Budgeted figures should be as close as possible to actual figures

2. Estimation and judgements should be made on rational grounds.

3. Sticking to Budget schedule.

4. Finding meaningful variances and studying the reasons of variances is material to growing and future betterment.

Challenges from budgeting

1. Variable nature of some expenses

2. Inflation

3. Windfall gains or expenses ( Unseen events)

4. Difficult budgeting for first time task. As it is tough to estimate some expenditures.