“A budget is telling your money where to go instead of wondering where it went.”
Attitudes toward budgeting can span from inspired and motivated to disinterested and obligated. Creating a budget involves using your crystal ball; assumptions made at the start of the year become less reliable as the year progresses and conditions change. Using a flexible budget helps you to engage more usefully in planning throughout the year.
Some leaders perceive a flexible budget as not rigid enough, allowing for too much correction based on actuals. The key is to use your static budget where necessary to track goals and performance while using your flexible budget to better pivot throughout the year as conditions change. Both budgets can be useful.
Here are some best practices to follow when considering your budget: