How are budgets created and used? What success have you had with creating and using a...

How are budgets created and used? What success have you had with creating and using a personal budget?

Expert Solution

Budget is created keeping in mind the next month/quarter/Year spending on different items.

Budget can be of different types:

1. Personal

2. Firm's Budget

While in personal budget you take into account different type of personal spending, in a firm's budget, all the item head pertaining to firm's expenses will be considered.

Possible expense head in Personal budget and possible values:

S.No.	Head	Monthly Budget
1.	Rent	$800
2.	Food	$ 500
3.	Personal Hygiene	$100
4.	Cloths and other Shopping	$400
5.	Medicine	$ 100
6.	Local Conveyance	$100
7.	Entertainment	$200
	Total	$2200

Here you can see different heads have been assigned different values. These values are decided on the basis of past expense and future projection.

The budget is used to check the spending and overshoot if any and keep in check the overall spending.

As shown in the table, I regularly create monthly budget and follow it to keep expense in check. I found it very useful and was very successful in making and using.

jeff jeffy answered 1 year ago

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