The financial life of an individual and business will be healthier if proper budgeting is applied from the initial stage. I still remember the year 1999 when I wanted to buy a car for the first time and my monthly salary was around OMR 250. I had to take a taxi every day from home to work, at that time. It was exhausting and I had little time for myself. So I decided to buy a car.
“What is your budget?” my manager asked when I consulted him. My knowledge about budget was inadequate. The word budget was a new word for me and I had to look for its meaning and explanation in the dictionary.
In those days we worked six days a week. Fridays used to be off days. Whatever we wanted to do, like, meeting friends, visiting families, going for picnics or to cinemas, we had to do everything on Friday.
One Friday when I had some spare time I thought about budgeting. I took a pen and a notebook and wrote the amount of my salary, the amount that I paid for taxis every day, snacks that I bought for breakfast, amount that I paid for the utility bill, etc.
Once I did that, I ended up with some amount at the end of the month, which became the ‘saving’. I understood budget and cash flow. One should set a budget once he receives the income in the form of salaries and wages. It will be hard for an individual to become financially broken if proper budgeting is in place. He can easily live a good life as he already knows the “in” and “out” of money.
I gained both practical and theoretical lessons from moving personal budgeting to business and entrepreneurship budgeting. Starting a small business is not an easy task for someone who does not have financial background and the knowledge about the market. I experienced the same thing. Having an MBA was a profound support to enter to the market and to do the budgeting.
Does budgeting help to do a good business? Indeed, it does. It helps to prepare a good business plan, to monitor the progress of the business, to allocate the budget for different projects, to know the cost which is one of the components of the budget and it helps to manage the cash flow as well.
How many of us have ever pondered over the public demands for government schools, parks, roads, hospitals, etc. In most countries, the budget is not enough to fulfill all these demands at once. How do governments afford it? This might be a good question.
We often visit past theories and history to know more about the subject. Marxism is one of those theories and school of thoughts. Marxism perspective of budget says that budgets are an insidious tool used by capitalists to rationally justify the subjugation of the working class. Further, it has been explained that, the budget limits are prepared after guaranteeing profits and surplus value for company owners.
It has always been complicated for “non-financer” to comprehend the benefits of budgeting. So, let us put some advantages of budgeting which might help for good business. Some of the benefits of budgeting are; to ensure that correct planning takes place, to draw up a plan of expected performance, to define areas of responsibility, to act as a motivator for staff to achieve targets, to improve communication between staff, to ensure resources are used as efficiently as possible, and to enable comparisons between actual figures and budgeted figures.