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Creating and Managing a Budget

Preparing a Budget

One of the tasks financial officers face, especially for an organization that makes frequent business transactions, is that of preparing a budget. A budget is a tool used for planning and controlling financial resources. It is a guideline for an organization’s future plan of action, expressed in financial terms within a set period of time.

What a budget accomplishes

  • It helps refine goals. 
  • It compels members of the organization to use funds efficiently. 
  • It provides accurate information to analyze, adjust and 
  • evaluate programs and activities. 
  • It aids in decision making. 
  • It provides a historical reference to be used for future planning. 

Pre-budget considerations

To prepare the budget it helps to know the organization’s priorities, objectives, and goals. Upon starting, ask the following questions: 
What is the time period in question (e.g., one semester, entire school year)? 

  • What does the group want to accomplish most? 
  • How will this be accomplished? 
  • How much will it cost? 
  • What are the funding sources? 

Once these questions have been answered, begin preparing your budget. 

Preparing your budget

  • Determine and record available funds (e.g., carryover balance from previous year). 
  • Estimate and record expected income and when it will be available (dues, t-shirt sales, etc.). 
  • Define and record needed expenses (advertising, rentals, printing, supplies, etc.). 
  • Review, revise, and then assemble into a final budget. 
  • Have members vote for budget approval. 

Managing the budget

The budget must be flexible to anticipate conditions that might have been overlooked during the planning process. 

  • Set and maintain a minimum balance. 
  • Formulate general policies and procedures needed to provide internal control (e.g., allow only approved expenditures). 
  • Keep an accurate written log of financial transactions (income and expenses). 
  • Periodically and regularly compare the budget to your actual account statement of activity. 
  • Report financial matters on a regular basis to the organization. 
  • As the budget period is ending, compare the budgeted amounts to the actual expenditures and revenues. 
  • Review the data in order to establish priorities for the next budgeted period. 
  • Begin preparing for the next budget a month or more prior to the conclusion of the current budget period and then begin the process anew.