Budgeting is the key to effective financial management. A budget sets out how much money your group/organisation needs to carry out its planned activities, identify surpluses (or deficits) and highlight critical points in income and outgoing of cash.
ensure your group has the financial resources to achieve your plans with the object of meeting or exceeding budget
give direction by curbing activity due to limitation of resources
highlight periods of cash shortage and potential need for more funding
enable you to make sound financial decisions
enable you to keep track of your spending
enable you to cope with additional unexpected costs
provide a plan for saving and spending
Preparation for the year ahead should ideally begin half way through your current financial year.
Responsibility for drawing up and finalising the budget lies with the whole committee. They should start to prepare your group’s budget by considering their business plan, and identifying what your group wants to achieve over the next financial year. If you are a new group, drawing up a budget is one of the first things you should do.
Drawing up your budget is the first stage to budgeting. Once your budget is agreed, you will need to monitor your income and expenditure on a weekly or monthly basis. Be prepared to take action in response to how your actual income and expenditure compares with your budget.