How To Calculate A Budget

Table of contents:

How To Calculate A Budget
How To Calculate A Budget

Video: How To Calculate A Budget

Video: How To Calculate A Budget
Video: How to Calculate Monthly Spending Analysis | New To Budgeting Tips 2024, November
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The budget, be it family, government or corporate, was and remains the main list of all expenses and incomes for the reporting period. Let's start calculating it.

How to calculate a budget
How to calculate a budget

Instructions

Step 1

The budget is an extremely important and defining document.

It takes into account literally everything related to financial flows, both incoming and outgoing.

It is usually drawn up for a year. We will not go into specifics: whether it is the budget of a company, a family, or something else - the structure does not change significantly.

How to calculate a budget
How to calculate a budget

Step 2

So, the main ratio laid down in the budget: income / expenses.

Think carefully and seriously what guaranteed expenses you have to cover (rent, rent, taxes, etc.), what income is expected (interest, profits, investments, etc.).

Consider whether it is worth it and whether you will be able to allocate funds for development, which may require repair or replacement in the near future.

It would also be very useful to provide for possible reserve amounts that will come in handy in case of force majeure.

Evaluate the economic situation, inflation forecasts, stock exchanges, and more. We must not forget that the calculation should be carried out taking into account these indexation coefficients over the next year, and not use the data of the current period, because everything is changing. Based on this, we can conclude that the budget is, although a computational document, but it has a substantial proportion of the forecast in its essence. Therefore, it is quite possible that adjustments will occur in it, and by the next reporting period you will be able to compare your calculations with reality and apply the experience gained to drawing up a new plan.

Step 3

As a result, you may end up with a deficit or a surplus budget - roughly speaking, whether you will be in positive territory or in negative territory at the end of the year. It does not always happen that if you have a deficit, then this is definitely a bad thing. Perhaps it is due to investments that can bring significant profits in the future, outside the period under review. The same applies to a surplus budget: yes, you still have money, but think: is it worth finding uses for it, especially if you already have a reserve item in your calculations.

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