What are the 7 Types of Budgeting?

By BYJU'S Exam Prep

Updated on: November 9th, 2023

The 7 types of budgeting used by businesses are Strategic plan budget, cash budget, master budget, labor budget, capital budget, finance budget, and operating budget. The process of making a spending plan is known as budgeting.

Budget refers to this plan for spending money. Making this spending plan enables you to estimate your financial situation in advance and decide whether you will have enough money to accomplish your goals. Simply balancing your expenses and income constitutes budgeting.

7 Types of Budgeting

A systematic approach known as budgeting anticipates the income and expenses of an individual, family, group, corporation, or government.

  • Businesses can track their financial performance with a realistic report, and decision-making depends on this.
  • The subtypes include personal, corporate, government, static, flexible, master, operating, cash, financial, and labor.
  • Different approaches to budgeting include incremental, zero-based, activity-based, participatory, negotiated, and value proposition.

Budgeting Methodology

The seven steps of financial planning are listed below:

  • Establishing the goal of financial planning is the first step.
  • Analyze and compare historical data on income and spending next.
  • After that, make a rough budget to direct your efforts in the direction of your objective.
  • To create a final budget, further develop the findings.
  • Create a budget report and submit it.
  • Review the budget periodically to look for any gaps.
  • Monitor the performance and, if necessary, make the necessary adjustments.

Importance of Budgeting

  • Helps Achieve Short-Term and Long-Term Goals: A financial planner may plan for the future and accomplish desired goals by predicting future revenue and expenses.
  • Making decisions: Business decisions are not made haphazardly; they are supported by thorough planning and research.
  • Avoid Cash Crunch: An individual, company, or government can avoid financial crises by effectively planning and executing a financial strategy.


What are the 7 types of Budgeting?

The seven different types of budgeting that firms use are the strategic plan budget, labor budget, master budget, cash budget, capital budget, operating budget, and finance budget.

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