Budget Meaning

What is Budget:

A budget is a forecast, projection, or estimate of expenses. As such, it is an action plan whose objective is to meet a predetermined goal. Budgets are part of the administration of the finances of families, professionals, companies, organizations or countries.

A person can make a budget where he calculates the amount of money that he will use during the following month for personal expenses, such as food, housing, transportation, services, shopping and leisure, in order not to overreach.

Companies, for their part, make a financial budget with a certain periodicity that includes income, expenses, net flow, initial cash, final cash, minimum cash, all with the aim of evaluating their economic status.

When we request the work of a person, we usually request, in advance, a budget of the work detailing the costs that it will entail, such as materials, time and labor, in order to evaluate its costs and advantages in relation to other budgets .

The State, for its part, must present to its citizens, annually and in the most transparent way possible, the budget allocated for public spending for the following fiscal year.

Regardless of the purpose of the budget, whether to cut or control expenses, evaluate the economic status of a company or know how the economic resources of a nation are managed, its importance lies in that it allows us to establish projections, programs and action plans for manage our money in the most efficient way possible.

However, the word budget is also often used to mean an assumption or pretext: "He did not leave home under the assumption that it was going to rain."

Zero-based budgeting

Zero-based budgeting, as its name implies, is a budgeting method used in business environments or in public organizations, where requests for resources are presented, evaluated and justified starting from scratch, that is, without taking into account previous periods or budgets. . In this sense, it is a procedure aimed at presenting, in a reasoned and transparent manner, all the budgetary requirements related to programs or expenses of an organization. Its purpose is to avoid vices, corruption or mismanagement of funds, as well as to reduce unnecessary expenses.

Sales budget

The sales or revenue budget is called the estimated sales revenue projection for a company. Since revenue is the main source of funds for a company, the sales budget represents the expectations of profitability and sustainability of the company. It is essential to determine both the production schedule and the business direction. It is based on studies, analysis and forecasts of the demand in the sector, and it is useful to define a market penetration plan in companies that are starting their activity and that base their financial plan on the sales budget.

Federation expenditure budget

In Mexico, the federation's expenditure budget is called the annual budget document of a legal, accounting and economic policy nature presented at the initiative of the President of the Republic, through the Ministry of Finance and Public Credit, to the Chamber of Deputies. for your approval. It outlines and authorizes the spending program foreseen for the federation during the fiscal year. Based on this budget, the funds assigned must be distributed to the three branches of the Federation at their federal, state and municipal levels.

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