Budgeting
The process of creating a financial plan to estimate revenue and expenses for a specific future period to guide financial allocation.
What Is It
Budgeting is the process of planning how money will be earned, allocated, and spent over a defined period. A budget turns strategy into numbers, showing what the business intends to prioritize and what it can afford.
Why It’s Important
Without a budget, spending becomes reactive and emotional. Budgets provide discipline, visibility, and accountability. They help businesses manage cash flow, anticipate risks, and make trade-offs consciously rather than accidentally.
Best Practices
Base budgets on realistic assumptions
Separate fixed and variable costs
Review budgets regularly, even weekly
Use budgets as guides, not handcuffs
Tie spending to outcomes
Key Insights
Budgets reflect values, not just numbers
Cash flow matters more than profit
Flexibility beats rigidity