WHAT IS A BUDGET? It is an organizational tool used for planning and controlling within an organization. Also, it is a formal written guideline for your future plan of action, expressed in financial terms within a set time period.

It enables the business owner to concentrate on cash flow, reducing costs, improving profits and increasing returns on investment. Budgeting is the basis for all business success. It helps with both planning and control of the finances of the business.

Since budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you. Following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt.

Why a budget is important Budgets allow a business to create a financial roadmap by setting goals and working to achieve those goals. A budget will help a business to determine priorities and therefore better control spending, which ultimately leads to higher profits.

Above all else, the key to a successful budget is consistency. Since budgeting is a long-term process, the more consistently you log your expenses, assess your progress toward your financial goals, and look for ways to reduce wasteful spending, the more benefit your budget will have on your financial life.

A properly structured budget points out what aspects of the business produce money and which ones use it, which forces management to consider whether it should drop some parts of the business or expand in others. Assumptions review….

Benefits of a business budget

• manage your money effectively.
• allocate appropriate resources to projects.
• monitor performance.
• meet your objectives.
• improve decision-making.
• identify problems before they occur – such as the need to raise finance or cash flow difficulties.
• plan for the future.
• increase staff motivation.

The Disadvantages of Budgeting

• Inaccuracy. A budget is based on a set of assumptions that are generally not too far distant from the operating conditions under which it was formulated.
• Rigid decision making.
• Time required.
• Gaming the system.
• Blame for outcomes.
• Expense allocations.
• Use it or lose it.
• Only considers financial outcomes.

Pro and Cons of a Budget

• Savings. It becomes much easier to save money when you know exactly how much you have available to save each month.
• Paying on Time. When you do not have a budget to guide you, it can be difficult to make sure all of your bills are paid on time.
• Frustration.
• Time Sensitive.

The Benefits of Budgeting:

• Provides You 100% Control Over Your Money.
• Let’s You Track Your Financial Goals.
• Budgeting Will Open Your Eyes.
• Will Help Organize Your Spending.
• Will Help Create a Cushion for Unexpected Expenses.
• Budgeting Makes Talking About Finances Much Easier.

In short, the most common consequences of not budgeting include a lack of savings, less financial security, out of control spending, a higher likelihood of going into debt, and more financial stress.

The purpose of having a budget is to see where your money is going, and where there’s room to spend less. Therefore, if you don’t follow a budget, you risk walking around virtually clueless about what your expenses actually cost you, and that might lead you to make some pretty poor decisions….

In short, budgeting is important because it helps you control your spending, track your expenses, and save more money. Additionally, budgeting can help you make better financial decisions, prepare for emergencies, get out of debt, and stay focused on your long-term financial goals.

Overspending on pointless things means that you will have less money available to invest in spending time with people you care about. Over time, this can lead to loneliness, isolation and a feeling of being “left out” of society in general….

The reasons behind overspending can be nuanced, but they generally fall into one of the following three main categories: Ignorance. Making purchases with a credit card or digital wallet. A lack of self-discipline….

However, if they lead you to go over your household budget for the month, then these purchases can derail your financial health. Overspending on discretionary buys scuttles more than a few household budgets. Also, that overspending can add up to significant debts or lost opportunities over time.

prodigal Add to list Share. Use the adjective prodigal to describe someone who spends too much money, or something very wasteful. Prodigal usually applies to the spending of money.

Most consumer spending falls into the larger categories of food, housing, transportation, healthcare, insurance, and other goods and services. Housing alone accounts for almost a third of spending. The savings rate is calculated by subtracting annual mean expenditures from annual mean income after taxes….

A person who lives simply and economically can be called frugal. Thrifty, spartan, and prudent are synonyms for frugal, a word that often has positive connotations when used to describe a person who lives a simple life.

penniless. adjective. someone who is penniless has no money.

Answer: Explanation: A person who does not spend money easily is known as a tightwad or a cheapskate. There is also another word for such person – ‘Scrooge’, as in someone who is niggardly when it comes to spending money. A tightwad person may not want to share money or spend money….

Cheap people are driven by saving money regardless of the cost; frugal people are driven by maximizing total value, including the value of their time. Being cheap is about spending less; being frugal is about prioritizing your spending so that you can have more of the things you really care about….

11 Very Obvious Signs That You’re Dating a Cheap Person AKA Ba5il

1. #1: He Talks About Money A LOT.
2. #2: He Complains About Your Spending Habits ALL the Time.
3. #3: He Always Has an Excuse for Not Having Enough Cash.
4. #4: He Calls Himself ‘7arees’
5. #5: Price Tags are What Matters.
6. #6: Cheap Dates Are His Thing.

Do you or someone you know go beyond being a cheapskate? If so, you may have a money disorder — one that financial therapists call “underspending.” Here are some symptoms of a chronic underspender. Sure, it’s fashionable to be frugal. But sometimes severe frugality can morph into a serious mental disorder….

People who are cheap aren’t usually looking at the bigger picture, with the long term in mind. They typically look to spend only the bare minimum for an item, in place of something of better quality. It’s all about spending the least amount of money or finding the best bargain….

A ‘stingy’ individual is someone who has money, but is very reluctant to part with it. He is a miser; he doesn’t like to spend money on himself or on others. He is reluctant to spend money on things are essential as well. Ebenezer Scrooge in Charles Dickens’ classic ‘A Christmas Carol’ was a stingy person….

15 Tips for Living Frugally Without Looking Cheap

1. Eliminate monthly subscriptions.
2. Shop for new insurance.
3. Buy used items.
4. Rent, don’t own.
5. Purchase at the right time.
6. Buy high-quality products.
7. Barter.
8. Choose low-cost experiences.

They are genetic. I don’t need to contact Henry Louis Gates to do genealogical research to see the patterns in my family tree….