Budgets seem to be everywhere. The term is probably most commonly used to describe an amount of money available. This is the result of all expected income and expenditure. For example, you could set a budget for your next business investment or project.
How much money do you need?
Only as a private person or private household can you have a budget, companies, associations or the state also work with it. However, the budgets fulfil different functions depending on the subject area.
Budgets in companies
In companies, it is the task of financial planning to draw up a budget at regular intervals. The employees in the finance department look at how much capital is required to meet the company’s goals, for example to produce goods or provide services, and how much money comes in as a result.
This comparison of costs and revenues makes the so-called earnings situation visible. This is to ensure that there is always enough money available.
The budget serves as an internal target in companies. This is both for certain expenses that must not be exceeded and for revenues that should at least be achieved. If the limits are torn, this is called budget overrun or budget underrun.
Budget in the public sector
There are also budget targets in the public sector. There, however, they go by the name of budgetary principles. Above all, economy is important. In this case, thrift means achieving a goal or result with the least possible use of resources. The whole thing is economical if the yield is greater than the effort.
How do you determine a budget?
In short, budgeting keeps your finances under control regardless of whether you are a private individual, a company or the entire state. The budget provides an overview of income and expenses and thus protects against nasty surprises.
The free budgeting app is a good tool not only for businesses but for private budget planning as well. It shows you exactly what you are spending your money on, it also helps you to save. Because there will certainly be some items that will surprise you and that you can scale down in the next month. Like companies, you can also set specific budget targets for this.