Describe at least five benefits of budgeting.
Week 3 Discussion 1 Describe at least five benefits of budgeting-Sample Solution
The Benefits of Budgeting
A budget illustrates a company’s or individual’s revenue and expenses for a specific time frame, which can be monthly, quarterly, or yearly. Srithongrung et al. (2019) argue that a reasonable budget should allow a firm to monitor its financial health effectively and initiate both short- and long-term expenses, including hiring additional employees and growing its operations. Generally, budgeting benefits both individuals and businesses since it attracts investors. Usually, Investors may require a company’s ability to manage allocated funds before investing. A well-structured budget demonstrates a company’s dedication to its goals, increasing investors’ confidence in their decision to invest in the company (Srithongrung et al., 2019). It enables them to examine the company’s budget sheets and understand how much cash it expects to earn, including its associated costs. Also, Srithongrung et al. (2019) explain that budgeting is crucial for achieving both personal and professional financial objectives. Since it provides a clearer understanding of the company’s/individuals income sources, a budget can help a firm and its stakeholders stay on pace to fulfill their goals.(Benefits of Budgeting Essay Example)
Moreover, budgeting makes it possible for people and businesses to track their debts, and saving a well-structured budget can help the company or individual determine when their expenses will be settled and remind them when they might have excess funds for savings (Srithongrung et al., 2019). Additionally, Srithongrung et al. (2019) observe that budgeting is necessary for saving for unforeseen or emergency expenses, such as an unexpected increase in taxes. This can help the company or individual avoid using funds allocated for other projects to settle emergency expenses. Lastly, creating a budget allows company’s/individuals make informed financial decisions (Srithongrung et al., 2019). It simplifies making important choices, such as how much revenue is needed to increase employee salaries.(Benefits of Budgeting Essay Example)
Srithongrung, A., Ermasova, N., Yusuf, J.-E. W., & IGI Global (2019). Capital management and budgeting in the public sector. Hershey, Pennsylvania: IGI Global. ISBN: 9781522573302