The moment we hear the word “budget,” we may experience an unpleasant feeling! Reason: We tend to see it as an external control, a force limiting our freedom to spend on the things we want . If this is our understanding of the budget, then certainly it will give rise to a negative feeling. But, in reality, a budget is totally something else. This article is an attempt not only to clear our misunderstandings on the budget, but also make us see the importance and the need for it in our life and in the life of our institutions.
What is a Budget?
To say it in simple words, a budget is nothing but making a plan to spend our money. When we say, “making a plan,” we always use it in the context of making a plan to achieve a particular goal. Likewise, in finance too, when we talk of making a plan, we mean making a plan to achieve a particular financial goal. Thus, a budget is made not in the air; it is made in the context of achieving certain financial goals, i.e., our needs. In other words, a budget is nothing but creating a spending plan for our needs. And we cannot create a spending plan unless we have money to spend. Hence, “budget” is understood as drawing up a spending plan for the resources we have. It allows us to determine in advance our future goal and the way to get there. It helps us to manage our money wisely, so that we can have enough money to do the things we need to do or would like to do. Depending on the circumstances, it may also mean cutting down on other things so that we can save enough money to do the things we need to do. It helps us to focus on the things that we need and prioritize our spending accordingly. It is to enable us to save money for our greater goals and in the light of it to spend only on our actual needs and not on all our wants.
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Fr Alex Gnanapragasam SJ