A budget is the estimate of the income (receipts) that you hope to receive and the expenditure (payments) you expect to incur.Your organisation should draw up annual budgets for individual projects and events, and for overall activity each year.The annual budget is part of your plan for future activity and can also form the basis of your bookkeeping – day-to-day accounting.
As discussed in Section 2, simple accounting lists money spent and received. If you start by listing the items in your budget, along with either the cost or income associated with it, you can then track actual income and expenditure.
Budgeting process
1. Prepare the plan
List all the items you think will require money being spent. These might include rent, salaries and office costs. Keep capital costs (fixed assets like computers and office furniture) separate from running costs (ongoing expenses like salaries, postage and phone bills).
2. Fill in the figures
Consult as widely as you can to get accurate estimates about what will be spent and what income will be received.
3. Make notes
Explain how you arrived at your figures. That way you can revise the figures if your assumptions change.
4. Revise the figures
Show the draft budget to relevant staff, volunteers and trustees. Do they agree with your assumptions? Do you need more information?
5. Approval
The final budget will need to be discussed and approved by the trustees.
6. Monitoring and revision
As part of your ongoing financial management, keep track of the money actually coming in and going out compared to what is planned in the budget. Discuss this with the trustees so that you can take action if necessary.
This page is a summary of information contained in the full online toolkit.
