The word “budget” often creates an unpleasant feeling, especially in religious circles. Why so? Because it is understood in a negative sense—as an external control over us. This is totally wrong. We need to understand it properly.
Two Kinds of Budget
A budget can be of two kinds—an activity-oriented budget and a goal-oriented budget. Many institutions make an activity-oriented budget. It is nothing but a budget for the normal running of the institution, taking into account the salaries, maintenance, office cost, etc. So, normally people prepare a budget by adding 5 or 10% to the current expenses. Some of them do not even consider the income side. Any budget has to start with the income. Based on the resources available on hand, a budget is made for various expenses. This is the minimum one can do. In this sense, a budget can be understood as a plan to allocate the available resources for all the expenses involved in the normal running of the institution. There is no place for any financial planning at all here.
The other kind, which I am trying to deal with here, is the goal-oriented budget. All of us have our goals in life, be it in the area of our family life, profession, business, sports or even in our personal life. Experience shows us that our goals become the purpose of our life. Similarly, in the area of finance, too. We have many financial goals, such as, saving money to buy a motor vehicle or a new house. These financial goals become the catalyst for our financial planning. If the goals are clearly spelt out, then the budget becomes a good means to achieve these goals. Thus, a budget becomes meaningful only in the context of a financial goal. There can be no budget without a financial goal—and vice versa.
Goals must be “SMART”
Any financial goal has to be “SMART”—which is an acronym for “specific, measurable, achievable, realistic and time-bound.” It is not enough to have a goal, but it should have all the above five elements. If our goal is vague, then it will only remain a dream. For an institution, it is not enough to say, “We want to increase our savings.” We have to clearly spell it out as: “We want to save twenty lakhs…
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