finance budget for business plan

How to Write a Small Business Financial Plan

Noah Parsons

3 min. read

Updated January 3, 2024

Creating a financial plan is often the most intimidating part of writing a business plan. It’s also one of the most vital. Businesses with well-structured and accurate financial statements in place are more prepared to pitch to investors, receive funding, and achieve long-term success.

Thankfully, you don’t need an accounting degree to successfully put your budget and forecasts together. Here is everything you need to include in your financial plan along with optional performance metrics, specifics for funding, and free templates.

• Key components of a financial plan

A sound financial plan is made up of six key components that help you easily track and forecast your business financials. They include your:

Sales forecast

What do you expect to sell in a given period? Segment and organize your sales projections with a personalized sales forecast based on your business type.

Subscription sales forecast

While not too different from traditional sales forecasts—there are a few specific terms and calculations you’ll need to know when forecasting sales for a subscription-based business.

Expense budget

Create, review, and revise your expense budget to keep your business on track and more easily predict future expenses.

How to forecast personnel costs

How much do your current, and future, employees’ pay, taxes, and benefits cost your business? Find out by forecasting your personnel costs.

Profit and loss forecast

Track how you make money and how much you spend by listing all of your revenue streams and expenses in your profit and loss statement.

Cash flow forecast

Manage and create projections for the inflow and outflow of cash by building a cash flow statement and forecast.

Balance sheet

Need a snapshot of your business’s financial position? Keep an eye on your assets, liabilities, and equity within the balance sheet.

What to include if you plan to pursue funding

Do you plan to pursue any form of funding or financing? If the answer is yes, then there are a few additional pieces of information that you’ll need to include as part of your financial plan.

Highlight any risks and assumptions

Every entrepreneur takes risks with the biggest being assumptions and guesses about the future. Just be sure to track and address these unknowns in your plan early on.

Plan your exit strategy

Investors will want to know your long-term plans as a business owner. While you don’t need to have all the details, it’s worth taking the time to think through how you eventually plan to leave your business.

• Financial ratios and metrics

With all of your financial statements and forecasts in place, you have all the numbers needed to calculate insightful financial ratios. While these metrics are entirely optional to include in your plan, having them easily accessible can be valuable for tracking your performance and overall financial situation.

Common business ratios

Unsure of which business ratios you should be using? Check out this list of key financial ratios that bankers, financial analysts, and investors will want to see.

Break-even analysis

Do you want to know when you’ll become profitable? Find out how much you need to sell to offset your production costs by conducting a break-even analysis.

How to calculate ROI

How much could a business decision be worth? Evaluate the efficiency or profitability by calculating the potential return on investment (ROI).

• Financial plan templates and tools

Download and use these free financial templates and calculators to easily create your own financial plan.

Sales forecast template

Download a free detailed sales forecast spreadsheet, with built-in formulas, to easily estimate your first full year of monthly sales.

Download Template

Accurate and easy financial forecasting

Get a full financial picture of your business with LivePlan's simple financial management tools.

Get Started

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• What to include for funding

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Key takeaways

• A business budget is a financial plan that helps estimate a company's revenue and expenses, making it an essential tool for small businesses
• The steps to creating a business budget include choosing budget and accounting software, listing expenses and forecasting revenue
• If a business finds itself in a budget deficit, strategies such as cutting costs, negotiating with suppliers and diversifying revenue streams can help

As a small business owner, keeping your finances organized through a business budget is crucial to running a successful company.

Business budgeting involves creating a financial plan that estimates future revenue and expenses to make informed financial decisions, which can ultimately move the needle on your business’s financial goals and help it grow in profitability.

What is a business budget?

A business budget is a financial plan that outlines the company’s current revenue and expenses. The budget also forecasts expected revenue that can be used for future business activities, such as purchasing equipment. It sets targets for your business’s revenue, expenses and profit and helps you determine if you’ll have more money coming in than you pay out.

A business budget is an essential tool that helps you make wise business decisions. Without it, it’s difficult to gauge your business’s financial health.

What is the difference between a cash flow statement and a business budget?

A cash flow statement  (CFS) is a financial document that summarizes the movement of cash coming in and going out of a company. The CFS gauges how effectively a company manages its finances, including how it manages debt responsibilities and funds day-to-day operations.

It’s similar to a business budget in that you can see expenses and revenue. But while a budget gives a moment-in-time snapshot of your business’s financial performance compared to forecasts, the cash flow statement focuses on the actual inflows and outflows of money through your business.

Follow these steps to ensure a well-developed budget, from understanding your expenses to generating revenue and adjusting expenses to balance the budget.

1. Choose a budget and accounting software

First, you’ll want to store your expense and revenue information with accounting software to help you track your numbers and generate reports. Some software may also help you assign categories to the transactions, identify tax deductions and file taxes. Quickbooks is an example of accounting software.

Some business bank accounts also have accounting software built in, helping you stay organized by keeping your accounting and banking in one place.

2. List your business expenses

The next step in creating a small business budget is to list all your business expenses. Here are the types of expenses you want to include in your budget:

• Fixed expenses: Fixed expenses cost a fixed amount monthly or within the assessed period. Those costs include rent, insurance, salaries and loan payments.
• Variable expenses: Variable expenses can change monthly or over time, making them trickier to budget. This might include materials, direct labor, utility bills or marketing expenses.
• Annual or one-time costs: Some costs only occur a few times per year, while others you’ll only pay for as needed, such as buying new equipment. You still want to budget for these expenses by allocating a portion of your weekly or monthly budget toward one-time expenses.
• Contingency funds: Unexpected business costs can throw a wrench in your budget if not planned for. Such costs could include emergency repairs, necessary equipment purchases, sudden tax increases or unforeseen legal fees. To plan for these costs, you can create a contingency or emergency fund that’s separate from your operational budget.
• Maintenance costs: To allocate funds for maintenance costs, begin by including regular inspections and maintenance in your budget. Then, make sure to leave room for changes and unexpected maintenance costs.

3. Forecast your revenue

To estimate your future revenue, start by deciding on a timeline for your forecast. A good place to start is the previous 12 months. Your accounting software may also include revenue forecasting as one of its features, which can automate this step for you.

The timeline and your recent past growth can help you understand how much revenue you’ll generate in the future. Consider external factors that could drive revenue growth, such as planned business activities like expansion, marketing campaigns or new product launches.

You’ll also want to think about anything that might slow your growth. Many businesses experience seasonal fluctuations, which can impact your budget if you don’t plan for it. To account for these changes, list the minimum expenses required to keep your business running. Use your financial statements to understand these costs, and consider averaging out irregular expenses over the year to avoid surprises.

Ideally, your business should build a cash reserve during profitable periods to cover expenses during slower seasons. If necessary, consider various financing options, such as a business credit card or line of credit, that you can draw from to manage cash flow during peak or off times.

4. Calculate your profits

The next step in creating a business budget is to calculate your business profits. You can look at your total profits by calculating revenue minus expenses. That way, you see how much money you have to work with, called your working capital .

You should also understand your profit margins for each of your products and services, which can help you set prices or decide whether to offer a new product or service.

How to calculate your profit margins

To find out your gross profit margin, you’ll first need to calculate the gross profit. To calculate your business’s gross profit, subtract the cost of goods sold (COGS) from your total revenue. COGS includes all the expenses related to producing your products and services.

Once you have the gross profit, use the gross profit margin formula: (Revenue – COGS) / Revenue x 100. This will give you a percentage that shows how much profit you gain from that particular product after accounting for the product’s costs.

5. Make a strategy for your working capital

Knowing what to do with extra revenue, which is your working capital, is crucial for managing your business finances and growth. Here’s how to get started with a financial strategy that propels your business goals forward:

• Set spending limits for different categories in your budget. When listing your expenses, you should have set a dollar amount for each category. You can estimate this by a monthly average or a general forecasted amount.
• Set realistic short- and long-term goals. These goals will motivate you to stick to your budget and guide your spending decisions.
• Compare your actual spending with your net income and priorities. Look at the areas you’re spending and consider whether you need to reallocate money to different categories. Consider separating expenses into business needs and extras.
• Adjust your budget and actual spending. Adjust your spending to ensure you do not overspend and can allocate money towards your goals. If you need to cut spending, consider the categories that are extras, such as types of marketing that you don’t know will generate a return on investment.

6. Review your budget and forecasts regularly

Finally, review your budget regularly. By frequently checking in on your budget, you can identify any discrepancies between your planned and actual expenses and adjust accordingly. This allows you to proactively handle any financial issues that may arise rather than reacting to them after they’ve become a problem.

Regular reviews also allow you to refine your budgeting process and improve its accuracy over time. Keep in mind that your budget is not set in stone but rather a tool to guide your financial decisions and help you achieve your business goals.

What to do if you have a deficit in your business budget

Finding a deficit in your small business budget can be alarming, but there are several strategies you can employ to handle this situation.

• Do a cash flow analysis. Begin by doing a cash flow analysis to review what your business is earning and spending money on. Identify potential problems and adjust the budget as needed to prevent overspending.
• Cut nonessential business costs. Cutting spending may involve eliminating nonessential costs and transferring funds from other categories to overspent categories. Your goal is a balanced or profitable budget.
• Negotiate with suppliers. Be transparent in your communications with suppliers and explain your quality standards and why you’re seeking cost reduction. Explore options for cost reduction that do not compromise quality, such as process improvements or ordering in larger quantities.
• Create a lean business model. By removing anything that doesn’t benefit your customer, your business can potentially save time and resources. Lean business models focus on continually improving processes and customer experience without adding additional resources, time or funds.
• Add revenue and diversify revenue streams. Raising revenue requires a realistic plan with measurable goals to increase sales and overall business income. You can also consider other products and services you could offer that would make your business profitable.
• Use financing to cover temporary gaps. Applying for a small business loan can help pay bills during an unplanned shortfall. Since this will add an expense to your budget, make sure you can handle the loan repayments and your regular expenses.
• Plan for a deficit. In some cases, a planned budget deficit might be a strategic decision, such as investing in new opportunities that promise long-term benefits.

Bottom line

Having a well-developed business budget is crucial for making informed decisions. You can effectively manage your small business’s finances by tracking and analyzing your business’s inflows and outflows, forecasting your expected revenue and adjusting your budget to stay balanced.

Even in the face of a budget deficit, there are various strategies you can use to keep your business profitable, including negotiating costs with your suppliers, assessing your business operations and offering new products and services.

With a solid business budget in place, you can confidently navigate financial challenges and drive long-term success for your small business.

Frequently asked questions

What are the benefits of a business budget, what are the components of a business budget, how do you calculate fixed and variable costs in a business budget, related articles.

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Running a business without a budget opens oneself up to a host of financial problems, including failure. But what is a business budget and what does budgeting mean?

At its core, a business budget lets companies know how much money they have, how much they’ve spent, and how much they need for future initiatives. With budgeting, business owners can stay out of debt, reduce costs, earn profits, and make decisions aimed at growing their business. This is true for both large and small businesses.

This article takes a deep dive into business budgets, types of budgets, the meaning of budgeting and why it is essential business practice. 

What is a business budget?

A budget is a detailed, formal spending plan for a business for a specified time period (a month, quarter, or year). It is a forward-looking document estimating a company’s expenses and revenue within that period. A budget provides the necessary information for a business to fund and fulfil its commitments and make a profit while making sure it has money left over for unexpected expenses and future ventures.

Components of a budget

Understanding a business budget requires a clear understanding of its components: ‍

‍ This is the projected income from sales, investments, or other sources. This estimate is usually based on past financial records or, in the case of a new business, from the revenue of rival companies. While estimating revenue, it is important to take note of lean periods when business and revenue are down and factor in a financial cushion to tide over them. ‍

2. Expenses

‍ This component is split into:

• Fixed costs , or expenses that remain constant, such as rent, lease, utilities, salaries, insurance, legal and accounting fees.   
• Variable costs , or production-dependent fluctuating expenses, such as raw material prices, labour costs, packaging charges, shipping and transportation fees.  
• One-time expenses , such as money spent on a new building, furniture, equipment, software, or product patent.

‍ This is what is left after subtracting estimated costs from revenue. Profit is key to making  investment decisions. ‍

4. Cash flow

This is money that flows in (income) and out (expenses) of a business and helps companies predict future earnings. It is important to know not only how much money is coming in or going out but also when (peak and lean seasons) to make the right projections.

Some people might confuse a business budget with a cash flow statement because both track how money travels in and out of a company. The difference is that a cash flow statement is a summary of the movement of money while a budget serves a greater purpose as a tool for decision-making.

Types of budgets

There are different types of budgets in use, depending on the size, resources, and market position of businesses. A company typically has a Master Budget , which presents a broad overview of its finances. Within the Master Budget are multiple lower-level budgets.

Budgets might be specific to a department, subsidiary, or project. Depending on the time frame, they can also be long-term or short-term. Annual budgets are the norm but many companies also have monthly and quarterly budgets. Similarly, a business can use a long-term budget to plan financial goals three, five, or even 10 years down the line.

Then there are static and flexible budgets. With fixed revenue and expense estimates, a static budget isn’t affected by ups and downs in sales. It is mostly used by organisations with fixed funds, such as government agencies and non-profits. A flexible budget, on the other hand, adjusts to changes in production and sales volumes or external economic factors. It is ideal for businesses that are new or seasonal or have varying income.

What does budgeting mean?

A search online will result in various budgeting meanings. But to put it simply, budgeting is the process of preparing and using a budget. It is also called budget management or spend management . Budgeting means analysing data specific to the business as well as historical and current market trends to make informed business decisions. These decisions can range from the marketing strategies to be deployed for a venture to plans to expand the business into overseas markets. For small businesses, intelligent budgeting helps them use their modest financial resources to make the most of a business opportunity.

Five stages of budget management

1. financial analysis.

‍ Budget planners must have keen analytical skills to ensure projections are accurate and goals realistic. By researching company records and market conditions, they must accurately determine the company’s financial health and use that knowledge to make good business decisions.

2. Financial forecasting

‍ Financial forecasting helps companies predict their performance in a pre-determined future by providing valuable insights into, say, areas where they might incur extra expenses or where investments should be added or removed altogether. ‍

3. Budget preparation

‍ At this stage, a company determines its revenue, expenses, and profit, breaking these down by month, quarter, and year. It also sets goals and takes important decisions (such as identifying high-priority goals and projects that require maximum funding). It is good practice to set aside an emergency fund to account for unexpected challenges.

4. Budget implementation

‍ Many businesses fail to do this as they find their budgets restrictive. However, they must remember that a budget improves financial control. If a company struggles to implement its budget despite having the will to do so, it might be because the spend management plan has shortcomings that need to be examined.

5. Budget evaluation

‍ Companies mustn’t forget to go back to their budgets periodically to check if the actual numbers match the projections. This will lead to necessary revisions and keep the budget relevant. Regular reviews also ensure budgets change with the way a business evolves.

Components of a growing company’s budget

At the top is the Master Budget, which has two components, the Operating Budget and the Financial Budget. These, in turn, are broken down into sub-budgets:

1. Operating Budget

‍ It presents an overview of a company’s projected income for a period, usually up to a year. Its objective is to set financial goals and check the results. An operating budget can be created every month or quarter and relies on the following sub-budgets:

Sales Budget

‍ It lists the expected product units, per unit price, and total revenue expected from their sale. To arrive at these estimates, budget planners depend primarily on feedback from salespeople and to a lesser extent on other information sources such as the state of the economy and pricing policies. The Sales Budget – also called a Sales Forecast or Revenue Budget – is the first step in preparing the Master Budget.   ‍

Production Budget

‍ The next step is to determine the number of product units to be produced, taking into account the number of units already in stock and the final number that is needed. This is the only budget to be stated in unit terms instead of dollar terms. Companies use the Production Budget to adjust production levels. 

Direct Materials Purchases Budget

‍ Next comes the materials purchase budget, which states how much additional raw material is required to produce the projected number of items and how much this will cost.

Direct Labour Budget

‍ Production requires manpower and the labour budget specifies the number of work hours and workers required and their cost.

Overhead Budget

‍ Excluding direct materials and direct labour expenses, the Overhead Budget accounts for all other production-related costs – for use of machinery, equipment and factory premises; for indirect materials such as machine parts and safety devices for workers; for indirect labour such as supervisors and security wages; and compliance charges related to government regulations on safety, emissions, and hazardous material.

Administrative Expenses Budget

‍ It details the administrative expenses related to the production and sale of goods, such as employee salaries and benefits, taxes, expenses associated with buying office supplies and hiring professional advisors and consultants, and so on.

Ending Finished Goods Inventory Budget

‍ It helps set the per unit product price based on material, labour, and overhead costs.

Cost of Goods Sold Budget

‍ This budget details direct expenses incurred on producing a company’s goods. It includes direct costs for raw materials and labour and excludes indirect expenses such as those associated with distributing the goods or hiring sales personnel to sell them.

Budgeted Income Statement

‍ Combining information provided in the eight sub-budgets, this is a statement of a company’s net income – the earnings left after deducting the cost of goods sold, other expenses, taxes, and interests – for the budget period.

2. Financial Budget

‍ The second component of the Master Budget, the Financial Budget serves as a strategic plan for managing a company’s assets, liabilities, income, expenses, cash flow, and investments. It helps companies arrive at their net profit (earnings minus operating costs, taxes, and interest) at the end of the budgeting process. The Financial Budget is mostly used by larger firms to carry out long-term plans, but it can be invaluable to small and growing businesses as it presents a clear view of their financial resources, which can greatly help in decision-making. Like the Operating Budget, the Financial Budget is split into sub-budgets:

Capital Expenditures Budget

‍ It is a list of expenses incurred on the purchase and maintenance of fixed assets such as machinery, equipment, and plants. Most small and growing businesses don’t own their own factories and, therefore, have conservative capital expenditures. A typical Capital Expenditures Budget for a growing business might include money spent on buying software or leasing equipment.

Cash Budget

‍ This is of special interest to small and medium businesses, which typically operate on cash. Usually prepared on a monthly basis, a Cash Budget tells companies how much money they have (net working capital) at the month-end. They also pinpoint areas where the company might be overspending or underspending. 

Budgeted Balance Sheet

A statement of expected assets and liabilities at the end of the budget period. It is drawn from information provided in the Capital Expenditures, Cash, and Operating Budgets.

Additionally, many growing businesses have department-specific budgets such as an IT budget (hardware, software, personnel, outsourcing costs), HR budget (recruitment, training, learning and development, salaries and benefits), and a marketing budget (advertising, social media, and website development).    

Develop your business budget with our monthly budget Excel template

Now that we’ve covered the components of a business budget, learn to make one for your small business. This monthly budget Excel template is the perfect place to start. Input your own data into the budget template to turn it into a customised spend plan for your future endeavours, whether it is increasing sales or launching a new product. Need a marketing budget template on the double? This easy-to-use Excel template can be your guide to creating the perfect business budget. 

5 budgeting benefits for small businesses

1. meeting financial goals.

‍ All companies have financial goals – from cutting costs to increasing investments. Attaining its financial goals means a company has succeeded. But without a budget, it might not know if these goals were fulfilled at all. Another way budgeting helps businesses set and achieve goals is by replacing guesswork with accurate information and insights, maybe about opportunities waiting to be explored that they didn’t know about.

2. Ready for emergencies

‍ In business as in life, one must plan for the unexpected. Budgeting does just that. Take the Covid-19 pandemic, which saw scores of businesses shut shop. Those that survived probably had a little fund cushion to fall back on. As previously mentioned, setting aside a contingency fund is crucial in budget management. It can help companies tide over emergencies like economic recessions and even the general unpredictability of running a small business.

3. Planning ahead

‍ Running a business without a budget is like flying blind. Not knowing where its money is coming from or going can make companies incapable of making long-term commitments to customers/suppliers or taking advantage of opportunities. It can also deal a death blow to expansion dreams. Surely, no small business wants to stay small forever. ‍

4. Being debt-free

‍ With few financial resources, small companies rely on external funding to keep the business running. Failure to pay their debts can lead to loss of reputation and shut down funding avenues. To avoid this fate, businesses must meet monthly or quarterly repayment obligations and set these in their budget management plans.

5. Better decision-making

‍ To make any business decision, an organisation needs to know how much money it can allocate for that purpose. For instance, can it afford to offer employees a raise or hire advisors to improve productivity? With the clarity a budget provides, such decisions aren’t that difficult to make. From wise allocation of resources to knowing the right time to scale up operations, small businesses have much to gain from the improved decision-making budgeting brings.

5 risks of not having a budget

1. spending money you don’t have.

‍ Budgets help businesses forecast spending, keep up with payments, manage cash flow smoothly, and inject efficiency into expense management (employee-initiated expenses). Without a budget, a company might be spending money it doesn’t have, resulting in debt and worse.

2. Denial of funding

‍ Banks and other financial institutions won’t lend to a company unless it has a budget detailing where the funds will be invested and how revenue will be raised to repay the debt. For the same reason, investors won’t put their money in a business unless they see a spend management document. For small businesses, a lack of funding doesn’t just put the lid on expansion plans. It could very well put the survival of the business on the line. 

3. Poor product pricing

‍ Companies price their products on the basis of what they need to spend to produce them. Without the accurate cost estimates budgeting provides, they might not be setting optimal prices for profitable products. Or, they might be wasting their resources on products with insignificant profit margins.

4. Failed commitments and unhappy clients

‍ Without proper spend management, small businesses may run out of funds and fail to deliver on their commitments, leading to unhappy clients who won’t think twice before moving to more competent rivals. Such a loss of reputation can be permanently damaging for small companies and start-ups. 

5. Helpless in changing conditions

‍ Doing business is fraught with challenges and changes. It isn’t possible to predict every change but a budget gives businesses the flexibility to adjust quickly – perhaps, by cutting costs in the face of a sudden dip in sales. On the other hand, the absence of a budget makes businesses less agile and incapable of adapting to change.

How budgeting works – the methods

Are you a start-up, a small business, or a large corporation? The size of a business is one of many factors determining what budgeting methodology works best for you. Others include spend patterns, sales performances, and scale of resources.

• Incremental budgeting: This involves adjusting your previous budget by an increment or percentage to arrive at your current budget. It suits established businesses with historical data and companies whose funding patterns aren’t subject to sudden changes. Incremental budgeting is easy, uncomplicated, and common practice. But it can promote unnecessary spending and doesn’t account for external factors (changing market conditions). ‍
• Zero-based budgeting: Here, a business creates a fresh budget from scratch, assuming it begins at zero. Each dollar requested must therefore be justified. Zero-based budgeting is ideal for companies of all sizes, but particularly for those that want to focus on specific goals. It ensures resources are allocated efficiently and unnecessary expenses curbed. However, the process can be time-consuming. ‍
• Value proposition budgeting: This method lies midway between incremental and zero-based budgeting. It determines whether the value created from a product for the company and its stakeholders, including customers, justifies the cost of producing it. By helping companies prioritise products with high customer value, it helps reduce unnecessary expenses. As such, it is considered a good fit for small businesses. ‍
• Activity-based budgeting: It analyses activities – any activity that incurs a cost – to predict expenses. With activity-based budgeting, companies can pinpoint where each dollar goes, making it easier to cut costs where feasible and predict how much profit can be earned. On the flip side, this type of budgeting is time-consuming, expensive, and requires expert analysts. It is commonly used by large companies with considerable revenue. ‍
• Cash flow budgeting: As the name suggests, this method estimates how much cash flows in and out of a business over a specific period. This insight helps businesses use allocated funds wisely, ensuring there is enough to maintain day-to-day operations and also a little left over at the end of the budget period. Cash flow budgeting is suitable for all businesses, but it might be difficult for companies with thin profit margins. ‍
• Surplus budgeting: This comes into play when the estimated revenue exceeds total expenditure, resulting in a surplus. Surplus budgeting helps companies make prudent use of this surplus – for example, should it be used to grow the business or put aside for use during an emergency?

Budgeting methods can also vary according to the type of accounting used:

• Cash accounting: This method records income only after it has been received in the company bank account and expenses after the money has left the account. ‍
• Accrual accounting: Here, revenue is recorded when it is earned, not when it enters the bank account. Similarly, expenses are recorded when they are billed, not when money leaves the account.

Principles of successful budgeting

To come up with a well-thought-out budget, business owners must stand by these principles:  

Be realistic

‍ Set goals that can be reasonably achieved. Similarly, make sure the company doesn’t overestimate its projected income. Inaccurate projections not only cause operational problems but also harm a company’s credibility.

Be flexible

‍ Running a business can be unpredictable and budgets should be built to adapt to changing conditions. Whether it is an unexpected spike in raw material prices or a sudden shortage of shipping containers (which much of the world witnessed in 2021), make sure your budget has the elbow room to account for the unexpected. Again, earmarking savings for an emergency fund should be a golden rule of budgeting, if it isn’t already.

Be accurate

‍ A budget must be accurate when it comes to tracking expenses – especially purchases made in cash, which are often the biggest source of budget leaks. A budget that doesn’t account for every dollar will present a distorted expenditure estimate, which can endanger the entire budgeting process.

Be inclusive

‍ When a company holds its employees responsible for results, it should also include them in budget preparation and seek their opinion at the goal-setting stage. By incorporating their work experience and knowledge in the budget, employers can significantly increase their chances of success and boost their commitment to work.

Hold regular reviews

‍ Weekly, monthly, quarterly or yearly, a company’s financial goals and budgets must be revisited periodically to ensure the results match the projections. The review process should be standardised and a team set aside for it. Evaluations require manpower, time, and effort, but they are the only way to ensure the budget is fulfilling its function.

Be a budgeting pro with Aspire

Budgeting for business can be difficult, but Aspire can help you take effective control of your company spend. In tune with the industry best practices stated in this article, our budgeting solutions include:

• Spend limits and notifications to prevent overspending
• Real-time visibility into all company expenses
• Delegation of budget owners within teams for better accountability
• Automated receipt reminders, seamless uploading, and easily available transaction records
• Integrated accounting software for error-free transactions
• Interest-free credit for all those times you need ready cash. 

Click here to get started or to speak with an expert.

‍ Download this article as an e-book:  The Complete Guide to Business Budgeting and Budget Management

Frequently Asked Questions

How to Create a Small Business Budget in 5 Simple Steps

Want to protect the financial health of your small business? You need a business budget. Here's how to create one.

When you build a business, there are a lot of things to stay on top of, from marketing and finding new  clients  to building a website and establishing your digital presence. But there’s one element that you want to stay on top of from the very beginning—and that’s your business budget.

Having a detailed and accurate budget is a must if you want to build a thriving, sustainable business. But how, exactly, do you create one? What are the steps for business budget planning?

As a small business owner, let’s take a look at how to create a business budget in five simple, straightforward steps.

What’s a Business Budget—and Why Is It Important?

Before we jump into creating a business budget, let’s quickly cover what a business budget is—and why it’s so important for small businesses.

A business budget is an overview of your business funds. It outlines key information on both the current state of your finances (including income and expenses) and your long-term financial goals. Because your budget will play a key role in making sound financial decisions for your business, it should be one of the first tasks you tackle to improve business success.

And, as a  financially savvy owners, you’ll also want to have a budget in place to help you:

• Make sound financial decisions.  In many ways, your business budgets are like a financial road map. It helps you evaluate where your  business finances  currently stand—and what you need to do to hit your financial goals in the future for business growth.
• Identify where to cut spending or grow revenue.  Your business budgets can help you identify areas to decrease your spending or increase your revenue, which will increase your  profitability  in the process, outline unexpected costs, and help your sustain your business goals.
• Land funding to grow your business.  If you’re planning to apply for a business loan or raise funding from investors, you’ll need to provide a detailed budget that outlines your income and expenses.

Now that you understand why budget creation is so important to your business decisions, let’s jump into how to do it.

Business Budget Step 1: Tally Your Income Sources

First things first. When building a small business budget, you need to figure out how much money your business is bringing in each month and where that money is coming from – this will hep create an operating budget based on your business income.

Your sales figures (which you can access using the Profit & Loss report function in FreshBooks) are a great place to start. From there, you can add any other sources of income for your business throughout the month.

Your total number of income sources will depend on your business model.

For example, if you run a  freelance  writing business, you might have multiple sources of income from:

• Freelance writing projects
• A writing course you sell on your website
• Consulting with other writers who are starting small businesses

Or, if you run a brick-and-mortar retail business, you may only have one source of income from your store sales.

However many income sources you have, make sure to account for any and all income that’s flowing into your business—then tally all those sources to get a clear picture of your total monthly income to build your master business budget template.

Business Budget Step 2: Determine Fixed Costs

Once you’ve got a handle on your income, it’s time to get a handle of your costs—starting with fixed costs.

Your fixed costs are any expenses that stay the same from month to month. This can include expenses like rent, certain utilities (like internet or phone plans), website hosting, and payroll costs.

Review your expenses (either via your bank statements or through your FreshBooks reports) and see which costs have stayed the same from month to month. These are the expenses you’re going to categorize as fixed costs.

Once these costs are determined, add them together to get your total fixed and variable costs expense for the month.

TIP:   If you’re just starting your business and don’t have financial data to review, make sure to use projected costs. For example, if you’ve signed a lease for office space, use the monthly rent you will pay moving forward.

Business Budget Step 3: Include Variable Expenses

Related articles.

Variable costs don’t come with a fixed price tag—and will vary each month based on your business performance and activity. These can include things like usage-based utilities (like electricity or gas), shipping costs, sales commissions, or travel costs.

Variable expenses will, by definition, change from month to month. When your profits are higher than expected, you can spend more on the variables that will help your business scale faster. But when your profits are lower than expected, consider cutting these variable costs until you can get your profits up.

At the end of each month, tally these expenses. Over time, you’ll get a sense of how these expenses fluctuate with your business performance or during certain months, which can help you make more accurate financial projections and budget accordingly.

Business Budget Step 4: Predict One-Time Spends

Many of your business expenses will be regular expenses that you pay for each month, whether they’re fixed or variable costs. But there are also costs that will happen far less frequently. Just don’t forget to factor those expenses when you create a budget as well.

If you know you have one-time spends on the horizon (for example, an upcoming business course or a new laptop), adding them to your budget can help you set aside the financial resources necessary to cover those expenses—and protect your business from unexpected costs in the form of a sudden or large financial burden.

On top of adding planned one-time spends to your budget, you should also add a buffer to cover any unplanned purchases or expenses, like fixing a damaged cell phone or hiring an IT consultant to deal with a security breach. That way, when an unexpected expense pops up (and they always do), you’re prepared!

Business Budget Step 5: Pull It All Together

You’ve gathered all of your income sources and all of your revenue and expenses. What’s next? Pulling it all together to get a comprehensive view of your financial standing for the month.

On your businesses master budget, you’ll want to tally your total income and your total expenses (i.e., adding your total fixed costs, variable expenses, cost of goods, and one-time spends)—then compare cash flow in (income) to cash flow out (expenses) to determine your overall profitability.

Having a hard time visualizing what a business budget looks like in action? Here’s an operating budget example to give you an idea of what your new business budget might look like each month:

A Client Hourly Earnings: $5,000 B Client Hourly Earnings: $4,500 C Client Hourly Earnings: $6,000 Product Sales: $1,500 Loans: $1,000 Savings: $1,000 Investment Income: $500

Total Income: $19,500

Fixed Costs

Rent: $1,000 Internet: $50 Payroll costs: $5,000 Website hosting: $50 Insurance: $50 Government and bank fees: $25 Cell phone: $50 Accounting services : $100 Legal services: $100

Total Fixed Costs: $6,425

Variable Expenses

Sales commissions: $2,000 Contractor wages: $500 Electricity bill: $125 Gas bill: $75 Water bill: $125 Printing services: $300 Raw materials: $200 Digital advertising costs: $750 Travel and events: $0 Transportation: $50

Total Variable Expenses: $4,125

One-Time Spends

Office furniture: $450 Office supplies for new location: $300 December business retreat: $1,000 New time tracking software: $500 Client gifts : $100

One-Time Spends: $2,350

Expenses: $12,900

Total Income ($19,500) – Total Expenses ($12,900) = Total Net Income ($6,600)

Above all, once you have a clear sense of your profitability for the month, you can use it to make the right financial decisions for your small business moving forward.

For example, if you realize you’re in the red and spending more than you earn, you might cut your spending and focus on  finding new clients . Alternatively, if your income is significantly higher than your expenses, you might consider investing your profits back into your business (like investing in new software or equipment).

Use Your Business Budget to Stay on Track

Putting in the work to create a budget for your small business may seem like a hassle. But while it takes a bit of time and energy, it’s worth the extra effort. Thorough business budgeting gives you the financial insights you need to make the right decisions for your business to grow, scale, and prosper in the future.

This post was updated in October 2023

Written by Deanna deBara , Freelance Contributor

Posted on June 20, 2017

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Business Budget: What is it & Why is it important?

According to a survey conducted by Clutch , 61 percent of small businesses have not created a formal budget. Without a budget, you may not understand how your business is performing.

Creating a budget helps you understand how much money you have, how much you have spent, and how much money you will need in the future. A budget can drive important business decisions like cutting down on unwanted expenses, increasing staff, or purchasing new equipment. If you end up with insufficient money, the budget can guide you in altering your business plan or prioritizing your spending on activities.

With the right budgeting plan, you can keep your business out of debt or find ways to reduce the debt it is currently facing.  A comprehensive budget can even be used for obtaining business loans from banks or other financial institutions.

In this guide, you will learn about the importance of a business budget, the components of a good budget, and the different types of budgets.

So, what exactly is a business budget?

A business budget is a spending plan for your business based on your income and expenses. It identifies your available capital, estimates your spending, and helps you predict revenue.

A budget can help you plan your business activities and can act as a yardstick for setting up financial goals. It can help you tackle both short-term obstacles and long-term planning.

Different types of budgets

Your final budget is usually a combination of inputs from several other budgets that are prepared at a departmental level. Let’s look at the different types of budget and how they contribute to drafting a business plan.

1. Master budget

A master budget is an aggregation of lower-level budgets created by the different functional areas in an organization. It uses inputs from financial statements, the cash forecast, and the financial plan. Management teams use master budgets to plan the activities they need to achieve their business goals. In larger organizations, the senior management is responsible for creating several iterations of the master budget before it is finalized. Once it has been reviewed for the final time, funds can be allocated for specific business activities.

Smaller businesses often use spreadsheets to create their master budgets, but replacing the spreadsheets with efficient budgeting software typically reduces errors.

2. Operating budget

An operating budget shows a business’s projected revenue and the expenses associated with it for a period of time. It’s very similar to a profit and loss report. It includes fixed cost, variable cost, capital costs, and non-operating expenses. Although this budget is a high-level summary report, each line item is backed up with relevant details. This information is useful for checking whether the business is spending according to its plans.

In most organizations, the management prepares this budget at the beginning of each year. The document is updated throughout the year, either monthly or quarterly, and can be used as a forecast for consecutive years.

3. Cash budget

A cash flow budget gives you an estimate of the money that comes in or goes out of a business for a specific period in time. Organizations create cash budgets using inferences from sales forecasts and production, and by estimating the payables and receivables.

The information in this budget can help you evaluate whether you have enough liquid cash for operating, whether your money is being used productively, and whether there is and whether you are on track to earn a profit .

4. Financial budget

Businesses draft this budget to understand how much capital they’ll need and at what times for fulfilling short-term and long-term needs. It factors in assets, liabilities, and stakeholder’s equity—the important components of a balance sheet , which give you an overall idea of your business health.

5. Labor budget

For any business that is planning on hiring employees to achieve its goals, a labor budget will be important. It helps you determine the workforce you will require to achieve your goals so you can plan the payroll for all of those employees. In addition to planning regular staffing, it also helps you allocate expenses for seasonal workers.

6. Static budget

As the name suggests, this budget is an estimate of revenue and expenses that will remain fixed throughout the year. The line items in this budget can be used as goals to meet regardless of any increases or decreases in sales. Static budgets are usually prepared by nonprofits, educational institutions, or government bodies that have been allocated a fixed amount to use for their activities in each area.

Components of a budget

If you are starting a new business, the first budget you create might be a challenge, but it is a good learning experience and a good way to understand what works best for your business. The best place to start is getting to know your budget components. Initially you may need to make several assumptions to get your budget started.

1. Estimated revenue

This is the money you expect your business to make from the sale of goods and services.  There are two main components of estimated revenue: sales forecast and estimated cost of goods sold or services rendered. If your business is more than a year old, then your experience will guide you in estimating these components. If your business is new, you can check the revenue of similar local businesses and use those figures to conservatively create some estimated revenue numbers. But whether your business is new or old, it is important to stay realistic to avoid over-estimating.

2. Fixed cost

When your business pays the same amount regularly for a particular expense, that is classified as a fixed cost . Some examples of fixed costs include building rent, mortgage/utility payments, employee salaries, internet service, accounting services, and insurance premiums. Factoring these expenses into the budget is important so that you can set aside the exact amount of money required to cover these expenses. They can also be a good reference point to check for problems if your business finances aren’t going as planned.

3. Variable costs

This category includes the cost of goods or services that can fluctuate based on your business success. For example, let us assume you have a product in the market that is gaining popularity. The next thing you would like to do is manufacture more of that product. The costs of the raw materials required for production, the distribution channels used for supplying the product, and the production labor will all change when you increase production, so they will all be considered variable expenses.

4. One-time expenses

These are one-off, unexpected costs that your business might incur in any given year. Some examples of these costs include replacing broken furniture or purchasing a laptop.

Since it is difficult to predict these expenses, there is no certain way to estimate for them. But it’s wise to set aside some cash for this category to stay prepared.

5. Cash flow

This is the money that travels in and out of the business. You can get an idea of it from your previous financial records and use that information to forecast your earnings for the year you’re budgeting for. You’ll want to pay attention not only to how much money is coming in, but also when. If your business has a peak season and a dry season, knowing when your cash flow is highest will help you plan when to make large purchases or investments.

The final budget component is profit, which is a number you arrive at by subtracting your estimated cost from revenue. An increase in profit means your business is growing, which is a good sign. Once you have projected how much profit you are likely to make in a year, you’ll be able to decide how much to invest in each functional area of your organization. For example, will you use your profit to invest in advertising or marketing to drive more sales?

A budget is a road map for your business. It helps you predict cash flow, identify functional areas that need improvement, and run your operations smoothly. Successful businesses invest a lot of time and effort into creating realistic budgets, because they’re an efficient way of tracking the extent to which the business has achieved its goals. Creating a budget can get a bit overwhelming for new businesses as there are no previous figures to guide their budget estimates, but with some estimates based on the performance of competitors and an understanding of the components of a budget, you can complete your first budget and have a good road map for future budgets.

Related Posts

• Cash Flow Statement - Definition and Importance
• How to Create a Business Budget for Your Small Business
• Income statement - Definition, Importance and Example

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may I have more materials for budgeting?

Hey Patricia,

While we appreciate suggestions from our readers, we just wanted to let you know there’s more coming up on budgeting. However, besides this article, there’s another one on – How to create a business budget for your small business. Hope it’s insightful.

Has helped me learn a few things about types of budgets

I love this article. It is very helpful. I am interested in knowing which budgeting softwares are efficient when you say,” Smaller businesses often use spreadsheets to create their master budgets, but replacing the spreadsheets with efficient budgeting software typically reduces errors.” I am looking for one software for my company!

Thank you. Respectfully,

Hi Nilamba!

Budgeting is one of the important features in Zoho Books.

A few key highlights of Zoho Books include: 1. Management of vendors and customers. 2. Creating Estimates, Sales orders and Invoices. 3. Managing your Expenses, Bills, Purchase Orders. 4. Collaborative Client Portal through which your clients can easily view all their transactions and also make payments. 5. Integrations with other Zoho apps. 6. Integrations with Online payment gateways 7. Automated Bank feeds. 8. Exhaustive Reports and much more… It is available as a mobile app on Android, iOS and Windows as well. Please do write to us at [email protected] and we will be happy to explain how Zoho Books will be a great fit for your business.

Thanks you for the level of understanding on this topic but I need new materials as technology advance.

Thank you for the information, it’s great help.

Excellent and easily elaborated..

You might also like

Switch to smart accounting. try zoho books today.

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Budgeting and business planning

Once your business is operational, it's essential to plan and tightly manage its financial performance. Creating a budgeting process is the most effective way to keep your business - and its finances - on track.

This guide outlines the advantages of business planning and budgeting and explains how to go about it. It suggests action points to help you manage your business' financial position more effectively and ensure your plans are practical.

Planning for business success

The benefits, what to include in your annual plan, a typical business planning cycle, budgets and business planning, benefits of a business budget, creating a budget, key steps in drawing up a budget, what your budget should cover, what your budget will need to include, use your budget to measure performance, review your budget regularly.

When you're running a business, it's easy to get bogged down in day-to-day problems and forget the bigger picture. However, successful businesses invest time to create and manage budgets, prepare and review business plans and regularly monitor finance and performance.

Structured planning can make all the difference to the growth of your business. It will enable you to concentrate resources on improving profits, reducing costs and increasing returns on investment.

In fact, even without a formal process, many businesses carry out the majority of the activities associated with business planning, such as thinking about growth areas, competitors, cashflow and profit.

Converting this into a cohesive process to manage your business' development doesn't have to be difficult or time-consuming. The most important thing is that plans are made, they are dynamic and are communicated to everyone involved. See the page in this guide on what to include in your annual plan.

The key benefit of business planning is that it allows you to create a focus for the direction of your business and provides targets that will help your business grow. It will also give you the opportunity to stand back and review your performance and the factors affecting your business. Business planning can give you:

• a greater ability to make continuous improvements and anticipate problems
• sound financial information on which to base decisions
• improved clarity and focus
• a greater confidence in your decision-making

The main aim of your annual business plan is to set out the strategy and action plan for your business. This should include a clear financial picture of where you stand - and expect to stand - over the coming year. Your annual business plan should include:

• an outline of changes that you want to make to your business
• potential changes to your market, customers and competition
• your objectives and goals for the year
• your key performance indicators
• any issues or problems
• any operational changes
• information about your management and people
• your financial performance and forecasts
• details of investment in the business

Business planning is most effective when it's an ongoing process. This allows you to act quickly where necessary, rather than simply reacting to events after they've happened.

• Review your current performance against last year/current year targets.
• Work out your opportunities and threats.
• Analyse your successes and failures during the previous year.
• Look at your key objectives for the coming year and change or re-establish your longer-term planning.
• Identify and refine the resource implications of your review and build a budget.
• Define the new financial year's profit-and-loss and balance-sheet targets.
• Conclude the plan.
• Review it regularly - for example, on a monthly basis - by monitoring performance, reviewing progress and achieving objectives.
• Go back to 1.

New small business owners may run their businesses in a relaxed way and may not see the need to budget. However, if you are planning for your business' future, you will need to fund your plans. Budgeting is the most effective way to control your cashflow, allowing you to invest in new opportunities at the appropriate time.

If your business is growing, you may not always be able to be hands-on with every part of it. You may have to split your budget up between different areas such as sales, production, marketing etc. You'll find that money starts to move in many different directions through your organisation - budgets are a vital tool in ensuring that you stay in control of expenditure.

A budget is a plan to:

• control your finances
• ensure you can continue to fund your current commitments
• enable you to make confident financial decisions and meet your objectives
• ensure you have enough money for your future projects

It outlines what you will spend your money on and how that spending will be financed. However, it is not a forecast. A forecast is a prediction of the future whereas a budget is a planned outcome of the future - defined by your plan that your business wants to achieve.

There are a number of benefits of drawing up a business budget, including being better able to:

• 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

Creating, monitoring and managing a budget is key to business success. It should help you allocate resources where they are needed, so that your business remains profitable and successful. It need not be complicated. You simply need to work out what you are likely to earn and spend in the budget period.

Begin by asking these questions:

• What are the projected sales for the budget period? Be realistic - if you overestimate, it will cause you problems in the future.
• What are the direct costs of sales – i.e. costs of materials, components or subcontractors to make the product or supply the service?
• What are the fixed costs or overheads?

You should break down the fixed costs and overheads by type, e.g.:

• cost of premises, including rent, municipal taxes and service charges
• staff costs –e.g. wages, benefits, Québec Parental Insurance Plan (QPIP) premiums, contributions to the Québec Pension Plan (QPP) and to the financing of the Commission des normes du travail (CNT)
• utilities – e.g. heating, lighting, telephone
• printing, postage and stationery
• vehicle expenses
• equipment costs
• advertising and promotion
• travel and subsistence expenses
• legal and professional costs, including insurance

Your business may have different types of expenses, and you may need to divide up the budget by department. Don't forget to add in how much you need to pay yourself, and include an allowance for tax.

Your business plan should help in establishing projected sales, cost of sales, fixed costs and overheads, so it would be worthwhile preparing this first. See the page in this guide on planning for business success.

Once you've got figures for income and expenditure, you can work out how much money you're making. You can look at costs and work out ways to reduce them. You can see if you are likely to have cash flow problems, giving yourself time to do something about them.

When you've made a budget, you should stick to it as far as possible, but review and revise it as needed. Successful businesses often have a rolling budget, so that they are continually budgeting, e.g. for a year in advance.

There are a number of key steps you should follow to make sure your budgets and plans are as realistic and useful as possible.

Make time for budgeting

If you invest some time in creating a comprehensive and realistic budget, it will be easier to manage and ultimately more effective.

Use last year's figures - but only as a guide

Collect historical information on sales and costs if they are available - these could give you a good indication of likely sales and costs. But it's also essential to consider what your sales plans are, how your sales resources will be used and any changes in the competitive environment.

Create realistic budgets

Use historical information, your business plan and any changes in operations or priorities to budget for overheads and other fixed costs.

It's useful to work out the relationship between variable costs and sales and then use your sales forecast to project variable costs. For example, if your unit costs reduce by 10 per cent for each additional 20 per cent of sales, how much will your unit costs decrease if you have a 33 per cent rise in sales?

Make sure your budgets contain enough information for you to easily monitor the key drivers of your business such as sales, costs and working capital. Accounting software can help you manage your accounts.

Involve the right people

It's best to ask staff with financial responsibilities to provide you with estimates of figures for your budget - for example, sales targets, production costs or specific project control. If you balance their estimates against your own, you will achieve a more realistic budget. This involvement will also give them greater commitment to meeting the budget.

Decide how many budgets you really need. Many small businesses have one overall operating budget which sets out how much money is needed to run the business over the coming period - usually a year. As your business grows, your total operating budget is likely to be made up of several individual budgets such as your marketing or sales budgets.

Projected cash flow  -your cash budget projects your future cash position on a month-by-month basis. Budgeting in this way is vital for small businesses as it can pinpoint any difficulties you might be having. It should be reviewed at least monthly.

Costs  - typically, your business will have three kinds of costs:

• fixed costs - items such as rent, salaries and financing costs
• variable costs - including raw materials and overtime
• one-off capital costs - purchases of computer equipment or premises, for example

To forecast your costs, it can help to look at last year's records and contact your suppliers for quotes.

Revenues  - sales or revenue forecasts are typically based on a combination of your sales history and how effective you expect your future efforts to be.

Using your sales and expenditure forecasts, you can prepare projected profits for the next 12 months. This will enable you to analyse your margins and other key ratios such as your return on investment.

If you base your budget on your business plan, you will be creating a financial action plan. This can serve several useful functions, particularly if you review your budgets regularly as part of your annual planning cycle.

Your budget can serve as:

• an indicator of the costs and revenues linked to each of your activities
• a way of providing information and supporting management decisions throughout the year
• a means of monitoring and controlling your business, particularly if you analyse the differences between your actual and budgeted income

Benchmarking performance

Comparing your budget year on year can be an excellent way of benchmarking your business' performance - you can compare your projected figures, for example, with previous years to measure your performance.

You can also compare your figures for projected margins and growth with those of other companies in the same sector, or across different parts of your business.

Key performance indicators

To boost your business' performance you need to understand and monitor the key "drivers" of your business - a driver is something that has a major impact on your business. There are many factors affecting every business' performance, so it is vital to focus on a handful of these and monitor them carefully.

The three key drivers for most businesses are:

• working capital

Any trends towards cash flow problems or falling profitability will show up in these figures when measured against your budgets and forecasts. They can help you spot problems early on if they are calculated on a consistent basis.

To use your budgets effectively, you will need to review and revise them frequently. This is particularly true if your business is growing and you are planning to move into new areas.

Using up to date budgets enables you to be flexible and also lets you manage your cash flow and identify what needs to be achieved in the next budgeting period.

Two main areas to consider

Your actual income  - each month compare your actual income with your sales budget, by:

• analysing the reasons for any shortfall - for example lower sales volumes, flat markets, underperforming products
• considering the reasons for a particularly high turnover - for example whether your targets were too low
• comparing the timing of your income with your projections and checking that they fit

Analysing these variations will help you to set future budgets more accurately and also allow you to take action where needed.

Your actual expenditure  - regularly review your actual expenditure against your budget. This will help you to predict future costs with better reliability. You should:

• look at how your fixed costs differed from your budget
• check that your variable costs were in line with your budget - normally variable costs adjust in line with your sales volume
• analyse any reasons for changes in the relationship between costs and turnover
• analyse any differences in the timing of your expenditure, for example by checking suppliers' payment terms

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Business tips

7 free small business budget templates for future-proofing your finances

As a small business owner, you're likely balling with a lot more than your personal checking account. If you don't properly manage your business finances, there's more on the line than an overdraft fee—you now have an entire organization to account for.

Small business budgets are necessary to balance revenue, estimate how much you'll spend, and project financial forecasts, so you can stay out of the red and keep your business afloat.

But creating a small business budget template isn't a small task. Since I don't have a business to run, I did the heavy lifting for you—check out these free, downloadable templates for your small business budgeting.

Table of contents:

2. Overhead budget template

3. multiple-project budget template.

4. Startup budget template 

5. Labor budget template

6. cash flow budget template, 7. administrative budget template, periodic budget reviews, how to design your small business budget plan, small business budget faq, 1. static budget template.

Best for: Multiple departments or revenue streams; Industries with complex operations

A static budget combines all the function-specific budgets a business uses into one. Typically, a static budget includes the following items (plus any other budgets your business might use):

Cash flow projections: Estimations of how much money will flow into and out of your business. They also help you decide when, how, and what you should spend money on.

Total expected spending: All estimated expenses, including labor and administrative costs. 

By integrating all of your budgets and projections, the static budget provides a full picture of your business's estimated expenses and financial strategy for the upcoming fiscal year. 

Best for: Service-based businesses

It's easy to forget about expenses that aren't directly tied to production, like delivery charges or utilities. But these costs exist (and can add up quickly), so you need an overhead budget. A detailed overhead budget template will include:

Administration expenses

It compares your budgeted amount to actual figures (warning: it may be a rude awakening) and can help improve accuracy for future financial planning. 

Predicting overhead spending helps you plan how to use other funds more practically too—if you know how much you'll spend on overhead, you can make better business decisions. For example, you'd know whether you can afford to invest money into other initiatives like adding a delivery service or upgrading equipment.

Best for: Project-based industries

If you're managing multiple projects like website development or event planning, each with its own budget and expenses, you need a multiple-project budget to help keep your head on straight. This type of budget will help you track the following items per project:

Product-by-product COGS (cost of goods sold)

Labor costs

Equipment and resource costs

Indirect project expenses like travel

A multiple-projects budget establishes estimates for everything you need to get projects across the finish line. It also lets you track costs to ensure you're not spending more than you accounted for in the budget.

4. Startup budget template

Best for: New small businesses and startups

Startups need to ensure financial success from the get-go, so they can reinvest profit into the business and potentially attract more investors. 

But unlike established small businesses, you don't have past financial data to base expenses on. That's why you need a startup budget to focus on expenses for your first year of business, including items like:

Funding from investors and loans

Licensing and permits

Logo and website design

Website domain

Business software

Security installation 

Overhead expenses

Capital expenses

Best for: Larger businesses with lots of employees

Unless you're a one-person show, you'll need a labor budget. And even if you are a one-person show, it's good to know if you can afford to pay yourself. A labor budget breaks down all employee-related costs like: 

Payroll taxes

Contract labor

Break down employee costs into direct, indirect, fixed, and variable categories to clarify how your company allocates its resources. You can also consider different scenarios more easily when you understand the breakdown of labor costs.

For example, you can simulate the impact of adding or reducing staff in specific departments or assess the effects of different compensation structures on different teams.

An accurate forecast of labor costs ensures you can sustainably meet your staffing needs and can help you make informed hiring decisions. Down the road, it can also help you determine if you can afford to give your staff raises, bonuses, or additional benefits.

Best for: Businesses with fluctuating income and expenses; Seasonal businesses; Retail

As important as it is to be mindful of how much money you're spending, you should also track how much money you're making . A cash flow budget helps estimate how money is flowing in and out of your business. It includes:

Starting balance (set at the beginning of the month, quarter, or year)

Projected cash inflow from all revenue streams

Estimated cash expenditures

Ending balance (calculated at the end of the month, quarter, or year)

This type of budget lets you proactively manage your resources, anticipate potential cash shortages, and strategize for growth. For instance, if you know you're only going to break even this year, you may wait on expanding or making a large investment. 

Best for: Businesses focused on streamlining operations

An administrative budget includes all those general expenses that the company as a whole needs to function. This type of budget accounts for: 

Depreciation expenses

Training and development

Communication expenses

Accounting fees

While you could technically include administrative expenses in an overhead budget and call it a day, a separate administrative budget gives more of an eagle-eye view of how well your business is operating. 

Without an eye on administrative costs, you may be spending unnecessarily or lose focus on areas where it'd be wiser to invest your money. In other words, you could be spending way too much on fancy pens when you should be saving up to upgrade your cash register. 

A budget isn't a "set it and forget it" deal. Regular budget reviews can help you stay on track with your financial goals and respond proactively to changing market conditions. 

You should compare your estimated budget to actual spending. Then you can see where you went over and where you can splurge more. Try to review your budget monthly, quarterly, and yearly.

Monthly: Compare actual performance against your budgeted figures for the month. Identify any deviations and look for insights into cash flow, sales trends, and expense management.

Quarterly: Dive deeper into performance over the last three months. Use trends to project revenue and expenses for the upcoming quarter and identify areas for improvement.

Yearly: Reflect on your long-term financial objectives for the fiscal year. Assess the effectiveness of your budgeting strategies, and set new budget targets for the upcoming year. 

It's cliched but true: you gotta spend money to make money. But that's no excuse to start throwing cash at your business willy-nilly.

Budgeting forces you to prioritize your objectives, so you spend money on the things that matter most. Here's how to create a small business budget in four steps:

Identify your working capital for the budgeting period. Add up your current assets like cash, accounts receivable, and inventory. Then subtract current liabilities like accounts payable and short-term debt. The remaining amount is what you have left to cover your operational expenses during the budgeting period.

Separate business and personal expenses. If you haven't already, open a dedicated business bank account. This makes it easier to track, categorize, and analyze your finances.

Determine your fixed and variable costs. Make a list of costs that stay the same every month (fixed costs) and what changes (variable costs). These will change based on the purpose of the budget. For instance, a labor budget will only consider employee-related costs.

Calculate your total expenses. Add up all the costs for your business, including fixed costs, variable costs, labor, and any other applicable expenses. This total is how much your business needs to run. Any leftover money from your working capital can be allocated toward other business investments. 

Budgeting methods

If you've budgeted before and hated it, you may just have been using an ineffective budgeting method for your preferences. Here are a few budgeting methods to try instead: 

Traditional: This budget is set for a determined amount of time and uses last year's numbers as a benchmark. Once you set your budget, you don't change it unless you get approval for an adjustment.

Rolling: This dynamic approach spans a continuous time frame instead of a fixed time period. As each month or quarter passes, you add a new budget period and drop the oldest period. This lets businesses adjust projections based on real-time performance and market conditions.

Flexible: This budget changes along with your sales forecast. As real-time sales activity deviates from budgeted amounts, you recalculate the budget to reflect the new data. 

Still don't know where to start with your small business budget? Check out the answers to these common questions before you open a new Google Sheet.

What should a business budget include?

A business budget should include all income sources and expenses. Income sources could include projected revenue from sales, loans, or potential investor funding. Expenses may include items like office space rent, employee salaries, insurance, and marketing. Add anything that helps paint a full picture of your finances.

How much does the average small business startup cost?

The average small business startup costs $40,000 in its first year of business. But this will absolutely vary depending on your type of business, unique expenses, and cash income. For instance, there are multiple types of businesses you can start with $10,000 or less.

What is the best free business budgeting software?

The best free budgeting business software will depend on what your business needs, but you can try apps like Mint or Wave. Or you can use a spreadsheet—scroll up for some free small business budget templates.

Automate your small business

Knowing when or where to invest money into your business is just one of the many tasks you have on your plate as a small business owner. Learn how automation for small businesses can help take some of those recurring tasks off your hands, so you can focus on growing your business. 

Related reading:

The best free small business software

The best CRMs for small businesses

How to create effective document templates

21 free Google Sheets templates to boost productivity

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Cecilia Gillen

Cecilia is a content marketer with a degree in Media and Journalism from the University of South Dakota. After graduating, Cecilia moved to Omaha, Nebraska where she enjoys reading (almost as much as book buying), decor hunting at garage sales, and spending time with her two cats.

• Small business
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How to Prepare a Budget for an Organization: 4 Steps

• 16 Nov 2021

An organization’s budget dictates how it leverages capital to work toward goals. For this reason, the ability to prepare a budget is one of the most crucial skills for any business leader —whether a current or aspiring entrepreneur, executive, functional lead, or manager.

Before preparing your first organizational budget, it’s important to understand what goes into a budget and the key steps involved in creating one.

What Is a Budget?

A budget is a document businesses use to track income and expenses in a detailed enough way to make operational decisions.

Budgets are typically forward-looking in nature. Income is based on projections and estimates for the periods they cover, as are expenses. For this reason, organizations often create both short- (monthly or quarterly) and long-term (annual) budgets, where the short-term budget is regularly adjusted to ensure the long-term budget stays on track.

Access your free e-book today.

Most organizations also prepare what’s known as an “actual budget” or “actual report” to compare estimates against reality following the period covered by the budget. This allows an organization to understand where it went wrong in the budgeting process and adjust estimates moving forward.

Budget vs. Cash Flow Statement

If the definition above sounds similar to a cash flow statement , you’re right: Your organization’s budget and cash flow statement are similar in that they both monitor the flow of money into and out of your business. Yet, they differ in key ways.

First, a budget typically offers more granular details about how money is spent than a cash flow statement does. This provides greater context for making tactical business decisions, such as considering where to trim business expenses.

Related: The Beginner’s Guide to Reading & Understanding Financial Statements

Second, a budget is, quite literally, a tool used to direct work done within an organization. The cash flow statement plays a different role by offering a higher-level overview of how money moves into, throughout, and out of an organization.

Instead of thinking of the two documents as competing, view them as complementary, with each playing a role in driving your business’s performance.

Steps to Prepare a Budget for Your Organization

The steps below can be followed whether creating a budget for a project, initiative, department, or entire organization.

1. Understand Your Organization’s Goals

Before you compile your budget, it’s important to have a firm understanding of the goals your organization is working toward in the period covered by it. By understanding those goals, you can prepare a budget that aligns with and facilitates them.

Related: The Advantages of Data-Driven Decision-Making

For example, consider a business that regularly experiences year-over-year revenue growth that’s offset by rising expenses. That organization might benefit from focusing efforts on better controlling expenses during the budgeting process.

Alternatively, consider a company launching a new product or service. The company may invest more heavily in the fledgling business line to grow it. With this goal, the company may need to trim expenses or growth initiatives elsewhere in its budget.

2. Estimate Your Income for the Period Covered by the Budget

To allocate funds for business expenses, you first need to determine your income and cash flow for the period to the best of your ability.

Depending on the nature of your organization, this can be a simple or complicated process. For example, a business that sells products or services to known clients locked in with contracts will likely have an easier time estimating income than a business that depends on active sales activity. In the second case, it would be important to reference historical sales and marketing data to understand whether the market is changing in a way that might cause you to miss or exceed historical trends.

Related: How to Read & Understand an Income Statement

Beyond income from sales activity, you should include other income sources, such as returns on investments, asset sales, and bond or share offerings.

3. Identify Your Expenses

Once you understand your projected income for the period, you need to estimate your expenses. This process involves three main categories: fixed costs, variable expenses, and one-time expenses.

Fixed costs are any expenses that remain constant over time and don’t dramatically vary from week to week or month to month. In many cases, those expenses are locked in by some form of contract, making it easy to anticipate and account for them. This category usually includes expenses related to overhead, such as rent payments and utilities. Phone, data, and software subscriptions can also fall into this category, along with debt payments. Any expense that’s regular and expected should be included.

Related: 6 Budgeting Tips for Managers

Variable expenses are those your business incurs, which vary over time depending on several factors, including sales activities. Your shipping and distribution costs, for example, are likely to be higher during a period when you sell more product than one when you sell less product. Likewise, utilities such as water, gas, and electricity will be higher during periods of increased use. This is especially true for businesses that manufacture their own products. Sales commissions, materials costs, and labor costs are other examples of variable expenses.

Both fixed expenses and variable expenses are recurring in nature, making it easy to account for them (even if variable expenses must be projected). One-time expenses , also called “one-time spends,” don’t recur and happen more rarely. Purchasing equipment or facilities, developing a new product or service, hiring a consultant, and handling a security breach are all examples of one-time expenses. Understanding major initiatives—and what it will take to accomplish them—and what you’ve spent in previous years on similar expenses can help account for them in your budget, even if you’re unsure of their exact values.

4. Determine Your Budget Surplus or Deficit

After you’ve accounted for all your income and expenses, you can apply them to your budget. This is where you determine whether you have enough projected income to cover all your expenses.

If you have more than enough income to cover your expenses, you have a budget surplus. Knowing this, you should determine how to use additional funds best. You may, for example, move the money into a rainy day fund you can access should your actual income fall short of projections. Alternatively, you may deploy the funds to grow your business.

On the other hand, if your expenses exceed your income, you have a budget deficit. At this point, you must identify the best path forward to close the gap. Can you bring in additional funds by selling more aggressively? Can you lower your fixed or variable expenses? Would you consider selling bonds or shares of company stock to infuse the business with additional capital?

An Important Financial Statement

The person responsible for generating a budget varies depending on an organization’s nature and its budgetary goals. An entrepreneur or small business owner, for example, is likely to prepare an organizational budget on their own. Meanwhile, a larger organization may rely on a member of the accounting department to generate a budget for the entire business. Individual department heads or functional leads might also be called on to submit budget proposals for their teams.

With this in mind, anyone who aspires to start their own business or move into an organizational leadership position can benefit from learning how to prepare a budget.

Do you want to take your career to the next level? Consider enrolling in our eight-week Financial Accounting course or three-course Credential of Readiness (CORe) program to learn financial concepts that can enable you to unlock critical insights into business performance and potential. Not sure which course is right for you? Download our free flowchart .

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How to build a financial budget for your business (and why you need one)

• Jason Andrew
• March 15, 2022

There are few words in the English language that conjure feelings of scarcity and deprivation like “budgeting”.

Our amygdala responds to the word budget in the same way it responds to the word diet — with utter dread.

Budgeting, like dieting, is disliked because it requires determination. It requires us to be disciplined with our spending habits. It forces us to think twice about spending and adopt the mentality of penny-pinching. It often requires a change in habits. 

But let’s face it, the world revolves around budgeting. Everyone from the federal government to your 12-year-old niece saving for her first mobile phone are on a budget. In fact, three in four Australians regularly maintain a personal budget.

Unfortunately, this enthusiasm for money management doesn’t translate to the business world. My best estimate, based on my experience, is that less than five per cent of Australian SMEs maintain a business budget. This is a detriment to business outcomes, and perhaps the main reason why a lot of businesses fail. 

Here’s what’s involved in setting a financial budget for your business, and how it can help you to make decisions for the future. 

In this article: 

What is a budget? 

• The three-way financial budget 
• Why have a financial budget?

A budget is a financial plan for your business. It’s a tool that is used to quantify an organisation’s business strategy over a set time period. A budget is typically built for a 12 month period, and it’s designed by your accountant or CFO.

The process of building a business budget entails the following:

• Developing estimates of future sales and cashflow
• Developing estimates of future expenses
• Developing estimates of capital expenditure and financing arrangements
• Summarising these estimates into a projected profit-and-loss, a balance sheet and a cashflow statement. This process is referred to as a three-way budget .

It’s important to note that your budget is a living, breathing document. It is not a spreadsheet that is dumped in the archive folder, ready to be revived when your bank or VC requires it.

Rather, a budget should be reviewed every month, and actual performance should be compared against the current month’s budget. This analysis allows your management team to measure progress against the organisation’s goals. This assessment guides management’s actions for the future.

A three-way financial budget 

At the risk of inflicting death by spreadsheets, a three-way budget is a jam-packed document filled with forecasted financials about your business. 

The outputs – your budgeted profit-and-loss, balance sheet and cash flow statement – are built off a set of assumptions tailored to your business. We include known expenses such as your employees, your capital expenditure, and all of your fixed operating costs. 

From a revenue perspective, we do deep analysis into the products you sell, the average gross profit margins, and even forecasting your inventory. 

We use all of the assumptions of your business to build your financial plan that becomes the blueprint for your business for at least the next 12 months. This allows management to predict the future, set targets and work towards a goal. Importantly, it helps you to look forward and plan for the future of your business.

Why have a financial budget for your business? 

There are a range of benefits that come with maintaining a financial budget.

1) Quantify what is and isn’t working

The process of comparing actual results against a budget allows your management team to assess how the organisation is tracking compared to its goals. It can act as a data point to address what tactics are working, what isn’t working and what should be tweaked.

2) Predict the future

A well prepared and thought-out budget can help to predict future financial performance. By assessing projected sales, expenses and cashflow, it allows management to make proactive decisions. For example, if budgeted sales are expected to be lean due to the holiday season, financing facilities can be pre-approved to fund any working capital shortfalls.

3) Align management to organisational goals

Keeping staff and management aligned to the goals of the organisation is hard to do without a pace car. A budget can provide the set of quantifiable targets they can strive towards. Simply put, it’s an accountability tool.

4) Understanding the business drivers

Beyond visibility, the value of developing a budget is in the process. It will help your management team understand what drives your business. For example, revenue should be broken down to number of leads, average sale value and conversion rate.

To create discipline within our business, we must focus on the process, rather than the end goal. Focus on the ritual of being accountable to the budget framework and make tweaks as we go — rather than leaving it to a mad sprint to the finish line.

A budget is an antidote to our impulsive, often emotionally charged decisions. It’s a tool to keep us disciplined and focused on our long-term strategic goals. 

Just like your 12-year-old niece has her heart set on buying a phone, you can achieve your business goals with a thorough financial budget. 

So, if you’re interested in setting financial accountability in your business, send me a DM . We’re here to help.

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Financial Budgeting

Financial budgeting definition.

Financial budgeting is the process of planning company expenses and revenues for a time period. Budgets set forth the plans of management in financial terms. This includes allocating financial resources and identifying available cash flows for required spending.

A budget and financial planning strategy detail a company’s expectations for what it aims to achieve for the current, upcoming year or another timeframe. For example:

• Expense and revenue estimates
• Cash flows expected
• Debt reduction expected
• Comparison of actual versus projected business financial budget, calculation of variances between them

Financial budgeting represents the overall financial position, goals, and cash flow of an organization. This regular practice of timely operational and financial budgeting creates a baseline for comparison to see how actual results vary from expected performance.

Basic corporate financial budgeting process steps for an annual budget usually take between three to six months to complete. The components of this process, which remains confidential, might include:

• Establish and communicate management targets and goals
• Develop the detailed, final budget to directly support those targets and goals, and attach financial documents such as the balance sheet, income statement, and cash flow statement
• Finalize employee compensation plans (usually this is part of the process)
• Compile and adjust budget model and measurement metrics so management can assess progress
• Review and make final changes
• Disseminate subordinate and/or line of business budgets across the organization

Financial budgeting enables a team to implement a business plan tactically to achieve corporate goals based on a detailed and descriptive roadmap using set metrics. This allows for careful monitoring of performance over time and the ability to make changes while in progress to eventually achieve the desired goals.

Financial Budgeting FAQs

What is financial budgeting and forecasting.

Financial budgeting and financial forecasting help organizations plan where and how to evolve. The financial budget helps the business with the plan itself and the financial forecasting helps the team assess the current financial situation and whether the organization is moving in the right direction financially. The two tools are used in tandem, but they are distinct.

Budgeting quantifies the projected finances a business will be working with during a period. It sets the company’s financial direction for that period and sets expectations for income and revenue.

In contrast, financial forecasting estimates how much income or revenue will be achieved in a future period. This projection helps determine whether the company is meeting goals, allocating funds properly, and going in the right direction.

Budgeting serves as a baseline for comparison; this way management can see how expectations differ from actual performance. Management uses financial forecasting to analyze historical trends and company data to determine how to allocate the budget for the future.

In brief, financial forecasting:

• Does not engage in the historical analysis of the difference between actual performance and past forecasts like budgeting
• This is the future-facing assessment of how to allocate the budget for a future period
• Updated regularly, periodically, month-to-month or quarterly, as inventory, operations, or the financial budgeting plan change
• Can be short-term and/or long-term and can be updated with new data; for example, quarterly revenue forecasts might need to be updated based on changes to customer roll-up
• With forecasted data, a management team can take immediate action

Why is Budgeting Important for Financial Planning?

There are several reasons why financial management is important:

Greater resource availability. The primary function of financial budgeting is to ensure core resources are available as needed to implement plans and achieve business goals. Advance planning of financials allows leadership to determine which initiatives and teams require more or fewer resources.

Inform financial goals. Financial planning and budgeting can help set metrics for internal financial goals and record progress against them. Budgeting for any given period involves assessing how much revenue is needed to meet company-wide and team financial goals, not just allocating spend. Financial goals should be evidence-based and achievable enough that they inform other budget allocations.

Prioritize projects and initiatives. The value proposition of financial budgeting techniques is that prioritizing projects and initiatives is a natural byproduct of the process. When prioritizing each project, consider how it aligns with company values, the potential return on investment (ROI), and the extent it might affect broader financial goals. Determine each line item’s value to the organization and compare them.

Optimize financing opportunities. Documented budgetary information is particularly important for anyone potentially seeking funding or financing, such as a startup seeking outside investors, or an existing company needing a loan. Investors value detailed information about past, current, and predicted financial performance highly. Offering budgeting and financial reporting documents for previous periods demonstrates the ability to manage the finances of a business and allocate funds, and in some cases is required.

Achieve optimal flexibility. Ideally, everything goes to plan and all predictions are accurate. But as things like the coronavirus (COVID-19) pandemic in 2020 show us, this is rarely the case for organizations in the real world. Executives must often rework budgets thoughtfully and rapidly to account for safety concerns, major losses, and potential reputation damage. A budget is a plan to start with, and an agile mindset and the right tools enable leadership to adjust the plan as needed.

Business financial management is important because it helps organizations improve their profitability, extend their mission, save money, remain economically stable, and increase in value over the long haul.

Types of Financial Budgets

There are several types of financial budgets. Each approaches financial planning prioritizing different factors. Here are some common types:

Zero-based budgeting. At the start of each planning period, each item is set at zero dollars before reallocating. This approach is often used by organizations in financial distress, allowing them to start over each period.

Activity-based budgeting. Works backward from the company’s goals to determine the cost of achieving them and can be used to improve efficiencies and cut costs, especially in a large business.

Static budgeting/Incremental-based budgeting. Creates the budget for the upcoming period by adding or subtracting a percentage from the previous period using historical data. This model is usually best for businesses with highly predictable revenue and expenses that don’t fluctuate much.

Performance-based budgeting. Performance-based budgeting focuses on cash flow per unit toward programmatic results. It is often used by governments and nonprofits that need to keep an overall focus on their mission.

Value proposition budgeting. Assumes only line items that directly provide value to the organization should be included in the budget. This is another approach to government spending and sometimes to larger businesses taking an aggressive approach to spending.

Trialing various financial budgeting and forecasting techniques is one way to determine which is best suited to your organization; the right type of financial budget varies by situation and company.

What is the Financial Budgeting Process?

There are multiple steps in the process of creating a budget. Keep budgets as detailed and thorough as possible. Typically, a financial budget should include:

• All predicted revenue—including the value, types of revenue, and when it is expected
• Fixed expenses for the organization (employee salaries, insurance, property taxes, rent, utilities, etc.)
• Variable costs (maintenance, professional services, supplies, vehicle and travel expenses, etc.)

To create a budget, consider these financial budgeting tips:

• Review, collect, and comprehend all of the required budgetary inputs
• Analyze historical data, including previous budgets, to determine revenue and expense expectations by each fiscal period and year
• Collaborate with a cross-functional team of stakeholders, including budget owners, C-suite executives, and sales leaders to formulate the plan
• Identify any required capital expenditures such as infrastructure, equipment, or property that are required during the period
• Prepare financial statements with budgeted numbers including balance sheet, cash flow, and income statement
• Identify KPIs to measure progress
• Review the final budget for strategic growth opportunities such as adding equity or reducing debt, or other investment and divestment opportunities

Always monitor progress throughout the budgeted period, based on performance against budgeted goals, and update forecasts periodically.

Generate reliable financial forecasts as follows:

• Identify key metrics to focus the forecast such as marketing expenses or sales volume
• Input the latest actuals into the forecast template
• Determine the forecast time frame, typically to the end of the budgeted period
• Calculate trends based on year-to-date and historical actuals
• Apply trend calculations to real-time numbers and forecast results
• When updating the forecast, consider any variables such as geopolitical conditions or business situations, like a merger, that could skew the forecast

Periodic forecasts typically only project to the end of the current fiscal year. Instead of projecting to the end of the fiscal year, rolling forecasts are generated monthly, quarterly or weekly to help plan for a specific period beyond the annual budget—the coming six quarters, for instance. The forecast actualizes a unit, whether it’s a fiscal month or quarter, and then “rolls” to the next period. This enables the leadership to keep sight of long-term business strategies.

What is Included in a Financial Budget?

A financial budget offers a strategic overview of how a business manages cash flow, assets, expenses, and income. It establishes a comprehensive overview of revenue from core operations relative to spending via a comprehensive documentary picture of a company’s financial health. Financial budgets typically include a balance sheet, budgeted income statement, capital expenditures budget, and cash budget.

Benefits of Financial Budgeting

Financial budgeting enables an organization to chart its path and empowers the management team to engage in strategic enterprise budgeting and planning . The financial budgeting process delivers a clearly defined plan that reflects organizational goals for operations and finances. Financial budgets offer critical guidance for the year’s goals.

Other key benefits of financial budgeting include:

• Close examination of financial activities
• Expenses are more likely to be assessed for viability
• Detailed documentation of all the uses and sources of cash is required, ultimately allowing for accurate anticipation of cash flows by management
• Cross-functional stakeholders involved in budgeting create a sense of ownership and motivate team to achieve budgeted goals
• Budget, forecasts, and up-to-date financial results can always be compared for real-time insights into performance, and offer a chance to adapt
• Clarifies internal hierarchies and individual responsibilities
• Clarifies where and when financial resources are allocated and needed

Remember, budgets can become outdated as they are prepared in advance and based on a number of assumptions, so forecasting is also important—especially when questions are time-sensitive.

Other benefits to forecasting include:

• Forecasting identifies trends that may require a strategic adjustment
• A well-informed prediction of how, when, and why future costs may fluctuate enables simpler management of capital requirements and cash flows
• Reliable forecasts may open up more opportunities for financing with investors
• Forecasted numbers offer a logical starting point for the next budget
• Forecasting offers smart short-term focus for managers

Who is Responsible for Enterprise Financial Budgeting?

The budget owner is the person who is ultimately responsible for ensuring that the budget is followed. Budget owners are usually the operational directors and managers of companies who must ensure that the company follows whatever budget is laid out for them. The shareholders, owners, or the board of directors tasks the budget owner with this one, overarching duty.

Many large companies employ a committee of multiple budget owners charged with ensuring that the budget is followed. Typically, the committee consists of directors and managers from various divisions and departments of the company. This is a more democratic but less efficient approach that can lead to indecisiveness and even infighting.

However, even a single budget owner does not work alone and instead has consultants, financial experts, lawyers, industry experts, and others working under them. The budget owner is ultimately accountable to the shareholders or owners.

Typically on the budget owner team:

Department managers. Mid-level department managers provide information to the finance and accounting department throughout the budgeting process, reporting revenue contributions and departmental expenses and providing the details needed to project future income and expenses.

Finance and Accounting team. Corporate finance and accounting teams manage accounts receivable, accounts payable, bookkeeping, and payroll. Senior associates might create sales and payroll reports, analyze input-cost trends, audit expense reports, or engage in other tasks as part of the budgeting process.

Corporate executives. Corporate executives at the top management level are directly accountable to the board of directors, manage the company’s finances, and present final budget proposals to the board. The chief financial officer (CFO) or equivalent executive is responsible for top-level budgets based on the finance or accounting team’s input. Sales directors forecast the next year’s sales trends. Chief operating officers (COOs) forecast future payroll and operating costs. Chief marketing officers (CMOs) forecast the next year’s expected market-share increase and marketing expenses, while chief technology officers (CTOs) forecast technology expenses.

Board of Directors. Corporate executives report directly to the board of directors who serve as the stockholders’ chosen representatives, and offer the final vote on proposed budgets. Board members answer directly to shareholders and company owners.

What are Financial Budgeting Tools?

There are a number of challenges that impede financial budgeting and forecasting efforts. Financial planning & budgeting software tools are commonly used to deal with these issues—because nearly all of them have to do with coping with data.

Disparate, wide-ranging sources of disconnected data collected. Data silos are a tremendous problem for finance and budgeting teams. Trying to extract data from siloed sources reduces the time spent on real analysis. It slows down the financial budgeting and forecasting cycle and makes it tougher to adapt to rapidly changing market conditions.

Manual processes and inaccurate data. While many finance teams still use offline spreadsheets and similar analog tools for financial budgeting and other core FP&A activities, they are slow, labor intensive, and impossible to manage across large businesses. Something like an Excel spreadsheet lacks the version control and data integrity solutions of corporate financial budgeting software with database capabilities.

Time-consuming data collection and input automated. Many contributors spending time editing many spreadsheets means that aggregation and data entry will be lengthy, error-ridden tasks. Finance automation tools render this manual sorting of budgeting data unnecessary.

Difficult collaboration simplified. The old-fashioned way of collecting data for the budgeting process from various departments is difficult. Spreadsheets are inflexible, and it’s not easy to aggregate, manipulate, retroactively change, and/or share budgeting data. An FP&A platform such as Planful makes data sharing and work between cross-functional teams simpler, and lends visibility to processes with current, accurate data. 

Insights made relevant. Real-time tracking of forecasting and financial budgeting KPIs are the key to regulating the financial health of a business. This kind of agile budgeting and financial planning process keeps companies profitable and competitive.

The role of data-driven platforms is to remain responsive, and rapidly help the user share insights. They can generate accurate sales forecasts based on historical data, create projections for future sales, and predict fluctuations to help develop accurate budget plans.

Does Planful Help With Financial Budgeting?

How does Planful financial budgeting and forecasting software help with financial budgeting?

Planful financial budgeting and forecasting software helps by providing teams with audit trails, workflows, and data validation measures all in one place for confident financial budgeting and forecasting.

There are many reasons to automate data entries for financial budgeting and forecasting:

• Reduce budgeting and forecasting cycle times by up to 50% or more
• View forecasts, budgets, and actuals from the same template so you can more easily identify trends and variances
• Drill down into transaction-level details right from your budget and forecast templates
• Complete planning solutions don’t usually require maintenance or management from IT
• Cross-functional stakeholders can all work from the same connected template. Audit trails allow users to track, validate, and approve changes and add commentary
• Scenario modeling features make it simple to test forecasts and budgets against an unlimited number of potential future business scenarios 
• Customizable workflows let you supplement the budgeting process with an additional executive review step
• Data visualization dashboarding helps stakeholders visualize where the business is headed

Curious to learn what else Planful can do to help your team learn how to do financial budgeting more effectively? Contact us for a demo of our automated financial budgeting services.

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Thailand to Widen 2025 Budget Deficit as It Reworks Handout Plan

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(Bloomberg) -- Thailand plans to raise the fiscal deficit estimate for next fiscal year to stimulate a sluggish economy, according to a senior official, the clearest signal yet that the government is veering toward funding a $14 billion cash handout program through the state budget.

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The government needs to update the budget framework to bring it in line with the changing economic situation, Pornchai Thiraveja, director-general of the Fiscal Policy Office, said after a meeting of the fiscal and monetary policy committee chaired by Prime Minister Srettha Thavisin in Bangkok on Monday. The meeting agreed to review the country’s medium-term budget framework that will allow for a wider deficit for the fiscal year starting Oct. 1.

Srettha’s cabinet last year approved a budget gap of 713 billion baht ($20 billion), or 3.56% of the country’s gross domestic product, for fiscal year 2025 under the medium-term fiscal framework. The outline calls for a gradual reduction of the shortfall until 2028 with a target to achieve fiscal balance “at an appropriate timing.”

Pornchai’s comments came as Thailand is weighing the option to fund its 500 billion baht “digital wallet” plan from the state budget. The original proposal to finance it through a one-time borrowing faced resistance from some state agencies and lawmakers. Srettha last week ordered officials to come up with a funding plan that may also involve a combination of borrowing and the state budget.

The stimulus plan, delayed by several months over differences on how it will be funded, is set to be implemented in the fourth quarter of calendar year 2024. Some central bankers and opposition parties have argued that the payout may fan inflation and widen fiscal deficit.

READ: Thailand Rethinks Funding Plan for $14 Billion Cash Handout

Pornchai didn’t specify if the larger deficit was to make room for the cash handout scheme, aimed at reviving a sluggish economy through private consumption. Pornchai also declined to give details on the planned increase, saying it will first need to be approved by the cabinet.

Deputy Finance Minister Julapun Amornvivat said earlier that details of the digital wallet financing will be announced on April 10. There is already a conclusion, and the plan will face no objection as it has cleared nearly all concerns, he added.

NOTE: Thailand Lawmakers Approve $96 Billion Budget Bill After Delay

Stimulus measures, including the digital wallet plan, are billed as “extremely necessary” by Srettha, who doubles as Finance Minister. The Thai economy is coming off a decade of average sub-2% growth and still faces other headwinds, including uneven economic recovery after the pandemic and high interest rates.

--With assistance from Patpicha Tanakasempipat.

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©2024 Bloomberg L.P.

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To Get Your Finances in Order, Try ‘Loud Budgeting’

By Veronica Majerol March 22, 2024

• Share full article

Money is a touchy subject. Many people shy away from discussing what they make, what they can afford and how much they’ve saved.

But “loud budgeting” could change that.

Here’s what that means →

“Loud budgeting” was coined by Lukas Battle, a 26-year-old comedian and writer in New York City, in a TikTok video in December.

As Battle envisions it, the term can help people be loud and proud about their financial goals, setting “financial boundaries without being uncomfortable or embarrassed,” he said in an interview.

The phrase can be an incantation of sorts against invitations to spend when you would rather not. “You can be like, ‘I’m not going to dinner, I’m loud budgeting this week,’ and there’s no further need for explanation,” he said.

Battle’s video, which has been viewed more than 1.5 million times, has garnered a chorus of approving comments from TikTok users.

“I just started thrifting & ‘loud budgeting’ is a great description of how I feel bragging about my finds to my friend group,” wrote @srattyb.

“Me box dying my hair, doing my own nails and wearing $20 dresses … not cuz im broke,” said the TikTok creator @lorenrosko, but because, “Why would I spend my money?”

So can loud budgeting really help people with their finances?

Chris Browning, the founder and host of the podcast “Popcorn Finance,” said that if the term proves to have staying power and gets people to talk about money, it would be a net positive.

“We have all these emotions that come up, like shame or guilt, and we don’t really talk openly about it even with our closest friends,” he said.

He added that high inflation over the last couple of years may have helped make the money conversation less awkward.

Battle says “loud budgeting” is the inverse of “quiet luxury,” the 2023 fashion trend inspired by the ultrarich who, as a flex, sported expensive clothes that didn’t prominently display labels.

He distinguishes his notion of budgeting from the kinds often aimed at young people.

“It’s not like, ‘Skip the coffee a day and you’ll be a millionaire,’” the comedian said. “Keep the things that bring you joy in your life, because obviously it’s dark and short.”

Shop Talk explores idioms of the business world. Want to nominate a word or term? Email us at [email protected] .

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Free Annual Business Budget Templates

By Andy Marker | January 6, 2021

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We’ve compiled the most useful free annual business budget templates, including those for established companies, startups, and marketing teams. You’ll also learn more about what goes into creating an annual business budget. 

Included on this page, you'll find an annual business budget template , a first-year budget calculator , an annual startup business budget template , and an annual marketing budget template . Plus, we offer helpful tips for using an annual business budget template .

Annual Business Budget Template

Download Annual Business Budget Template

Excel | Google Sheets

Use this easy-to-fill annual budget template to gain year-over-year insight into your business’s expenditures and revenue. Enter planned employee, office, marketing, training, and travel costs, and use the respective tabs to track actual expenses and calculate your expense variance (the disparity between planned and actual expenses). A unique expense analysis tab provides a dashboard view of your planned vs. actual expenses, variance, and variance percentage. 

If you are looking for budget templates for nonprofits, check out this article for a vast variety of budget templates suitable for any nonprofit organization. 

First-Year Budget Calculator

Download First-Year Budget Calculator

Use this simple first-year budget calculator to determine whether your budding business has adequate resources to meet its financial obligations. Enter operating expenses (e.g., operations, marketing, occupancy, inventory, etc.) and employee salaries to compare startup costs to monthly expenditures. This first-year budget calculator features a section for personal finance details and how they might affect your organization’s overall budget outlook.

Annual Operating Budget Template

Download Annual Operating Budget Template

Use this annual operating budget template to gain year-over-year insight into how your organization’s expenditures relate to revenue. Enter total income, total expenses, and total savings to arrive at your month-by-month net income. Add salary or details, any interest income, refunds and reimbursements, and any other miscellaneous costs to help identify budgeting shortfalls and ensure your business is on sound fiscal footing.

You can find more operating budget templates in this article .

First-Year Startup Budget Calculator

Download First-Year Startup Budget Calculator

This template is ideal for startup companies that want to contrast their funding with expenditures to avoid any financial shortfalls. Use this template to ensure that your first-year budgeting calculations (startup costs, operational expenses, estimated and actual income, and any personal expenses) are as accurate as possible. Save this calculator as a one-off file with customized entries, or share it as a template with team members to standardize budgeting practices. 

Annual Startup Business Budget Template

Download Annual Startup Business Budget Template

Gain a year-over-year perspective of annual revenue vs. expenses with this startup-specific annual business budget template. Enter revenue (sales, commissions, and investments, etc.), expenses (salaries/wages, operations, marketing, etc.) and use the Summary tab’s dashboard-like view to see current budgeted expenses compared to actual revenue. Get a grasp on the bottom line by itemizing each expense and revenue source. Then, use that data to monitor your proximity to profitability.  To find more, please refer to our collection of free startup budget templates  and free small business budget templates . 

Printable Annual Budget Report Template

Download Printable Annual Budget Report Template 

Excel |  Word | PDF

Gain important insights into the overall health of your company’s budget with this print-friendly month-by-month and year-over-year budget report. Enter income (salaries, dividends/interest, etc.) and expenditures to determine your organization’s true annual income. You can share this annual budget report template as a one-off budget report, or use it as a template to fit all annual budget reporting needs.  

Annual Marketing Budget Template

Download Annual Marketing Budget

This annual budget template is designed specifically for marketing organizations — use it to compare estimated marketing campaign costs against actual costs. Enter expenses (national and local marketing, public relations costs, content marketing, social media, advertising, etc.) to get an overview of where you need to reign in costs to meet marketing budget goals. This template, with line-by-line, pre-filled, marketing-specific expenses, takes the guesswork out of accounting for each cost. You can also customize this budget template to meet your needs.

Why You Need an Annual Business Budget Template

An annual business budget template offers a single or year-over-year comparison of expenditures compared to revenue. The pre-filled information in an annual business budget template guides you through the annual budgeting process, so you can leverage pre-set criteria to gain insight into the accuracy of business’s expenses and revenue sources. 

In short, an annual business budget template provides you with visibility into your business’s true financial picture with an easy-to-use, pre-set list of projected and actual expenditures and revenue sources, and any differences between them. An annual business budget template allows you to enter planned salary, office space, marketing, training, and travel costs in order to calculate at your expense variance. 

While annual budget templates are useful for evaluating expenditures vs. revenues annually, you can also assess your budget’s feasibility quarterly or over your first business year. This information can help you create a budget that allows your business to continue operating with a sound financial outlook.

Tips for Using an Annual Business Budget Template

An annual business budget template features detailed, line-by-line lists of pre-set expenses and income. Use a completed budget to project the cost of year-by-year operations compared to available resources in order to justify your operational expenses. 

Use the preset criteria in an annual business budget template to determine the overhead and administrative costs related to your products or services and to make any adjustments. 

To ensure that you account for your business’s expenditures compared to potential — and actual — revenue, an annual business budget template should include the following sections: 

• Employee Costs: This is a line-by-line account of projected and actual labor-related business expenses (e.g., salaries, wages, benefits, insurance, bonuses, etc.).  
• Office Costs: This cost refers to the planned and actual occupancy costs (e.g., lease, electric, water, internet access, office supplies, security, etc.) of your establishment. 
• Marketing Costs: Include any anticipated marketing budget details (e.g., website hosting, collateral production, trade shows, etc.).
• Training/Travel Costs: Enter employees’ training costs (classes, webinars, certifications, etc.) and any related travel expenses. 
• In-House Income: Add the planned and projected revenue sources (e.g., sales, fees, commission, service charges, etc.). 
• Investment Income: This section covers funding from banks (dividends, loans, interest, etc.) and investor contributions. 
• Expense Variance: Determine the difference between projected and actual expenses.  
• Income Variance: Identify the difference between projected and actual expenses.
• Summary: Get the big picture of your business’s budget, as well as the variance between anticipated and actual expenses and income sources, so that you can continue to operate successfully. 

Additionally, be sure to consider one-time costs in your annual business budget. Seasonal costs may also impact your budget, as well as any promotional events on which you plan to spend more on advertising or marketing campaigns to boost sales. These expenses can affect your business’s annual revenue projections.

Better Manage and Track Annual Business Budgets with Smartsheet

Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

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Mint's shutdown is fast approaching — here are 7 budgeting apps to consider before losing access this weekend

Paid non-client promotion: Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate investing products to write unbiased product reviews.

• The popular budgeting app Mint is going away on March 23. 
• Intuit says app users can transition to Credit Karma, but it won't have the same budgeting features.
• If you used Mint to make budgets, here are seven alternative options.

Mint's shutdown is quickly approaching. The popular budgeting app is going away on this weekend, on March 23.

Intuit is asking Mint users to move to Credit Karma, one of the company's other personal-finance platforms. On Credit Karma, you will still be able to view your bank accounts, transaction history, spending, cash flow, and net worth . Credit Karma currently doesn't let you make monthly budgets or category budgets, though.

If you've been using the Mint app for its budgeting features, you'll have to consider other options. 

50% off Simplifi and all Quicken products for all new customers (offer ends March 31, 2024)

$3.99 monthly subscription or $47.88 annual subscription

50% off (offer ends March 31, 2024)

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Connect all your bank accounts, investments accounts, and credit cards
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Help you save for individual savings goals
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Create a budget
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Track expenses
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. 30-day money-back guarantee
• con icon Two crossed lines that form an 'X'. Must buy a subscription (no free option)

Quicken Simplifi is a great budgeting tool if you want to create a detailed monthly spending and savings plan and don't mind paying for a subscription. If you would rather get a budgeting app that doesn't have a subscription fee, you'll have to consider other options.

• 50% off on Simplifi for new customers
• Stay on top of your finances in under 5 minutes per week.
• Check your custom budgeting plan — anytime, anywhere!
• Track your spending
• See where your money is going and discover places to save.
• Keep your bills in check
• Find subscriptions you don't use and start saving from day one.

Here are seven of the best budgeting apps to explore if you prioritize an app that lets you make a monthly or categorized budget.

1. Honeydue

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Budgeting app for couples
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Can have individual and shared finances
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Create monthly bill reminders
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Can discuss finances through chat feature
• con icon Two crossed lines that form an 'X'. Only available through mobile app

Honeydue is featured in our best budgeting apps guide as the best option for couples. It's a great option if you don't want to pay a fee. It also allows you to have individual and shared finances.

Honeydue is a personal-finance app for couples. It lets you create a monthly budget by linking credit cards, loans, investments, and bank accounts. Couples choose what they share and can create a joint budget.

Honeydue is free to use. The mobile app is rated 4.5 out of 5 stars in the Apple store and 3.5 out of 5 stars in the Google Play store.

2. Monarch Money

Coming from Mint? Import your history and get 50% OFF with MINT50.

Premium Plan with a 7-day free-trial, then $14.99 per month or $99.99 annually

30 day free trial plus a 50% discount off the first year of an annual subscription to new subscribers (offer expires March 31, 2024)

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Link bank accounts
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Create unlimited budgets and make customizable categories
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Track individual savings goals
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Graphs and charts that track your spending and savings
• con icon Two crossed lines that form an 'X'. No free plan

Monarch Money is an overall solid option if you prioritize creating monthly budgets and saving for individual savings goals. The main downside of the app is that it doesn't offer a free plan. You'll have to a monthly or annual subscription fee.

Monarch Money lets you create a customizable budget, meaning you can create your own categories to track your spending for certain areas. 

The mobile app has a monthly or annual plan. The monthly plan costs $14.99 a month. The annual plan is $99.99 a year, which breaks down to about $8.33 a month.

Monarch Money has 4.8 out of 5 stars in the Apple store and 4.7 stars out of 5 in the Google Play store.

3. PocketGuard

Free Plan is $0; PocketGuard Plus has a monthly plan ($7.99 per month), an annual plan ($34.99 per year), and a lifetime plan ($79.99)

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Create a monthly budget
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Track bill payments
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Save for individual savings goals
• con icon Two crossed lines that form an 'X'. Free plan has limited features

Pocketguard may be worthwhile if you want a budgeting app with standard features. You can create a monthly budget, track bill payments, and save for individual savings goals. The free plan has limited features though, and PocketGuard Plus requires a subscription fee.

• Free plan and premium plan available
• PocketGuard Plus has a monthly plan ($7.99 per month), an annual plan ($34.99 per year), and a lifetime plan ($79.99)

PocketGuard allows you to make a monthly budget through the free or premium plan (called PocketGuard Plus). PocketGuard Plus lets you make customizable budget categories and unlimited budgets — for example, a personal budget, a business budget, and a couples' budget. 

The free plan is $0, while PocketGuard Plus has monthly, annual, and lifetime plans. The monthly plan is $7.99 a month, and the annual plan is $34.99 a year (which ends up being just under $3 a month). The lifetime plan is $79.99.

The app is rated 4.6 out of 5 stars in the Apple store and 3.8 out of 5 stars in the Google Play store. 

4. Quicken Simplifi

Quicken Simplifi has budgets with customizable categories. The platform also analyzes your spending and savings through charts and can generate monthly reports for your spending, general income, income after expenses, savings, and net worth.

There's also a special offer available: it's 50% off Simplifi and all Quicken products for new customers (offer ends March 31, 2024).

Quicken Simplifi has received 4.0 out of 5 stars in the Apple store and 4.0 out of 5 stars in the Google Play store. 

Quicken Simplifi Review

5. Rocket Money

Free to create a budget. Subscription fee applies to premium services.

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Connect all your bank accounts, credit cards, and investment accounts to track spending
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Bill negotiation feature
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Free plan available
• con icon Two crossed lines that form an 'X'. Limited features available with free plan
• con icon Two crossed lines that form an 'X'. Limited customer support availability

Rocket Money is featured in our best budgeting apps guide. While the Rocket Money app is free, there is a subscription fee if you want to use Premium features, like concierge services or premium chat.

Rocket Money has free and premium plans that allow you to make a monthly budget. The free plan lets you create a monthly budget using select categories. If you get the premium plan, you can make unlimited budgets. The premium plan also allows you to make customized budgeting categories.

The free plan costs $0. Meanwhile, the premium plan has a 7-day free trial. After that, you'll pay what you think is fair through a sliding scale that has price points from about $4 a month to $12 a month. If you select the $4 and $5 monthly plans, you'll be billed annually instead of monthly.

Rocket Money is rated 4.3 out of 5 stars in the Apple store and 4.2 out of 5 stars in the Google Play store. 

Rocket Money Review

34-day free trial; Then $14.99 per month or $99 per year

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Available on computer, phone, or tablet
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Reports for spending and net worth

YNAB may be a good option if you are interested in using the zero-sum budget strategy. It also may be worthwhile if you want to use a platform that's available through a computer, phone, or tablet. You'll want to consider other options if you do not want to pay a subscription fee, though.

YNAB helps you create a category budget through its four-rule method.

With the first rule, you'll implement a zero-sum budget, which means you'll assign every dollar you earn a purpose. The second rule requires you to factor in non-monthly expenses, such as holiday shopping or car maintenance. The third rule reminds you to be flexible with your monthly budget and make adjustments if you see that you're overspending in a certain category. The fourth rule encourages you to age your money. Essentially, the last rule points out that once you've focused on mastering the first three rules, you'll know where your money is going and spend less than you earn. 

Ultimately, the four rules make sure you think about where all your money is going and how to adjust for your future savings. 

YNAB can be used on the computer or through the mobile app. It costs $14.99 a month or $99 annually, which comes to about $8.25 monthly. 

The app is rated 4.8 out of 5 stars in the Apple store and 4.6 out of 5 stars in the Google Play store. 

YNAB Review

Free plan is $0; Zeta+ is $6.99 per month

• Check mark icon A check mark. It indicates a confirmation of your intended interaction. App for couples and families
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Joint bank accounts
• Check mark icon A check mark. It indicates a confirmation of your intended interaction. Create a budget with the envelope method
• con icon Two crossed lines that form an 'X'. Limited mobile app ratings

You might like the Zeta personal finance app if you want to organize finances with a child, partner, or other family members. It also may be a decent option if you find the envelope budgeting method appealing, or want to open a joint bank account. That said, Zeta has limited mobile app ratings.

Zeta is another personal-finance app for couples and families. Zeta has joint bank accounts and uses the envelope budgeting method, which means you put a set amount of money into specific categories. Each month, you'll spend what you have for that category.

Zeta has a free plan and a premium plan called Zeta+. Zeta+ can be used by families or people who want to automate their banking. The free plan costs $0. Zeta+ costs $6.99 a month. 

The mobile app is rated 4.5 out of 5 stars in the Apple store and 3.8 out of 5 stars in the Google Play store. 

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• Main content

House Republican budget calls for raising the retirement age for Social Security

WASHINGTON — A new budget by a large and influential group of House Republicans calls for raising the Social Security retirement age for future retirees and restructuring Medicare.

The proposals, which are unlikely to become law this year, reflect how many Republicans will seek to govern if they win the 2024 elections. And they play into a fight President Joe Biden is seeking to have with former President Donald Trump and the Republican Party as he runs for re-election.

The budget was released Wednesday by the Republican Study Committee , a group of more than 170 House GOP lawmakers, including many allies of Republican presidential nominee Donald Trump. Apart from fiscal policy, the budget endorses a series of bills “designed to advance the cause of life,” including the Life at Conception Act, which would aggressively restrict abortion and potentially threaten in vitro fertilization , or IVF, by establishing legal protections for human beings at “the moment of fertilization.” It has recently caused consternation within the GOP following backlash to an Alabama Supreme Court ruling that threatened IVF.

The RSC, which is chaired by Rep. Kevin Hern, R-Okla., counts among its members Speaker Mike Johnson, R-La., and his top three deputies in leadership. Johnson chaired the RSC from 2019 to 2021; his office did not immediately respond when asked about the new budget.

For Social Security, the budget endorses "modest adjustments to the retirement age for future retirees to account for increases in life expectancy." It calls for lowering benefits for the highest-earning beneficiaries. And it emphasizes that those ideas are not designed to take effect immediately: "The RSC Budget does not cut or delay retirement benefits for any senior in or near retirement."

The new budget also calls for converting Medicare to a "premium support model," echoing a proposal that Republican former Speaker Paul Ryan had rallied support for. Under the new RSC plan, traditional Medicare would compete with private plans and beneficiaries would be given subsidies to shop for the policies of their choice. The size of the subsidies could be pegged to the "average premium" or "second lowest price" in a particular market, the budget says.

The plan became a flashpoint in the 2012 election, when Ryan was GOP presidential nominee Mitt Romney's running mate, and President Barack Obama charged that it would "end Medicare as we know it." Ryan defended it as a way to put Medicare on better financial footing, and most of his party stood by him.

Medicare is projected to become insolvent in 2028, and Social Security will follow in 2033. After that, benefits will be forcibly cut unless more revenues are added.

Biden has blasted Republican proposals for the retirement programs, promising that he will not cut benefits and instead proposing in his recent White House budget to cover the future shortfall by raising taxes on upper earners.

The RSC budget also presents a conundrum for Trump, who has offered shifting rhetoric on Social Security and Medicare without proposing a clear vision for the future of the programs.

Notably, the RSC budget presents three possible options to address the projected insolvency of the retirement programs: raise taxes, transfer money from the general fund or reduce spending to cover the shortfall.

It rejects the first two options.

"Raising taxes on people will further punish them and burden the broader economy–something that the spend and print regime has proven to be disastrous and regressive," the budget says, adding that the committee also opposes "a multi-trillion-dollar general fund transfer that worsens our fiscal situation."

That leaves spending cuts.

The RSC budget launches blistering criticism at "Obamacare," or the Affordable Care Act, and calls for rolling back its subsidies and regulations that were aimed at extending insurance coverage.

Sahil Kapur is a senior national political reporter for NBC News.

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Thailand to widen 2025 budget deficit as it reworks handout plan

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THAILAND plans to raise the fiscal deficit estimate for next fiscal year to stimulate a sluggish economy, according to a senior official, the clearest signal yet that the government is veering towards funding a US$14 billion cash handout programme through the state budget.

The government needs to update the budget framework to bring it in line with the changing economic situation, Pornchai Thiraveja, director-general of the Fiscal Policy Office, said after a meeting of the fiscal and monetary policy committee chaired by Prime Minister Srettha Thavisin in Bangkok on Monday (Apr 1).

The meeting agreed to review the country’s medium-term budget framework that will allow for a wider deficit for the fiscal year starting Oct 1.

Srettha’s Cabinet last year approved a budget gap of 713 billion baht (S$26.4 billion), or 3.56 per cent of the country’s gross domestic product, for fiscal year 2025 under the medium-term fiscal framework.

The outline calls for a gradual reduction of the shortfall until 2028 with a target to achieve fiscal balance “at an appropriate timing.”

Pornchai’s comments came as Thailand is weighing the option to fund its 500 billion baht “digital wallet” plan from the state budget.

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Business insights centering on South-east Asia's fast-growing economies.

The original proposal to finance it through a one-time borrowing faced resistance from some state agencies and lawmakers.

Srettha last week ordered officials to come up with a funding plan that may also involve a combination of borrowing and the state budget.

The stimulus plan, delayed by several months over differences on how it will be funded, is set to be implemented in the fourth quarter of calendar year 2024. Some central bankers and opposition parties have argued that the payout may fan inflation and widen fiscal deficit.

Pornchai didn’t specify if the larger deficit was to make room for the cash handout scheme, aimed at reviving a sluggish economy through private consumption. Pornchai also declined to give details on the planned increase, saying it will first need to be approved by the Cabinet.

Deputy Finance Minister Julapun Amornvivat said earlier that details of the digital wallet financing will be announced on Apr 10. There is already a conclusion, and the plan will face no objection as it has cleared nearly all concerns, he added.

Stimulus measures, including the digital wallet plan, are billed as “extremely necessary” by Srettha, who doubles as Finance Minister. The Thai economy is coming off a decade of average sub-2 per cent growth and still faces other headwinds, including uneven economic recovery after the pandemic and high interest rates. BLOOMBERG

KEYWORDS IN THIS ARTICLE

Srettha thavisin, world bank cuts thai growth to 2.8% on weaker exports, thai economy expands slowly in february, helped by tourism: central bank, thailand’s february factory output falls 2.84% y/y, above forecast.

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