BUDGETS : A SIMPLE GUIDE

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A budget is a plan of how you are going to spend your money.

It gives you a yardstick against which you can monitor the actual spends once a project has started.

It allows you to see whether a project is likely to be worthwhile in money terms.

If your planned expenditure is greater than your expected income you are on to a nonstarter and need to have a rethink.

If you are planning a budget for the whole organisation it may be easier to break it down into individual projects, or parts, of your activity.

When preparing a budget it is important to consult with the people who are going to be responsible for working within it.

Set out your objectives – what is the budget for?

A. List all expected sources of income eg.  

• Grants
• Donations
• Fees
• Bank interest
• Membership

Capital projects eg. a building

• Builders labour
• Materials
• Planning & building regulation fees
• Architects & surveyors
• Other tradesmen
• Decorating and equipping

Revenue projects have running costs which can be broadly split into two categories

A. Wages & Salaries

• Gross wages
• Employers national insurance
• Pension costs

B. Overheads

• Rent
• Rates
• Heat
• Light and Water
• Insurances
• Printing ,stationery, postage and telephone
• Training, publications and subscriptions
• Minor equipment

If you make goods to sell you will have production costs. If you buy in goods for resale you will have the cost of stock purchases.

Step 1. Prepare a simple table

Step2. If the bottom figure is a negative number your budget is not viable and needs some more planning. If it is a positive figure you can expand it by listing out the details of the income and expenditure.

Step 3. Use the budget to plan and monitor both income and expenditure. Plan to take action quickly if the income falls short of the target or the expenditure exceeds it.

Step 4. Remember your budget is not cast in stone. You may need to revise it if there is a big change, eg. you lose a grant.

Unless you are dealing with a totally new project a useful starting point is to use the headings on your last set of accounts.