Basic Budgets One of the tasks you may face as a financial officer, especially if your organization transacts a lot of business, is that of preparing a budget. There are all sorts of methods for preparing budgets from flipping coins to using computers. No one method is best for all organizations. The method described below is fairly simple.

What is a Budget?
A budget is an organizational tool used for planning and controlling funds within an organization. It is a formal written guideline for your future plan of action expressed in financial terms with a set time period.

What Can a Budget Accomplish?
A budget can help refine goals that reflect the realistic resource environment. A budget compels members of the organization to use funds efficiently, provides accurate information for program and activity adjustment and evaluation, aids in decision-making, and provides an historical reference for future planning.

Basic Components of a Budget
Some basic components of a budget include a statement of the organization's goals, objectives and priorities, a specified time period to which the budget applies, a method of reviewing budget plans and procedures, and budgeted financial statements that include an estimated detailed expense and income breakdown.

Developing a Budget

• Begin preparations a month or more prior to the close of the current year.
• Prepare an outline of the organization's planned activities for the upcoming year.
• Do careful studies, investigations, research of funding, costs, resources, etc.
• Determine available funds (carry over balances from previous years, cash on hand, funds in the bank, etc.).
• Estimate expected income and date expected.
• Define needed expenses.
• Get price quotations on certain expenditures.
• Rank order by their relative importance - which activities make wise use of expenditure of funds.