What are the 7 types of budgeting?

By Ritesh|Updated : September 3rd, 2022

Strategic plan budget, cash budget, master budget, labour budget, capital budget, finance budget, and operating budget are the 7 types of budgeting used by businesses.

7 Types of Budgeting Strategies for Businesses

  • 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 labour.
  • 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:

  • Determine the purpose of financial planning first.
  • Next, analyse and contrast previous income and spending data.
  • Create a preliminary budget after that to guide your efforts toward your goal.
  • Develop the results further to establish a final budget.
  • Make a report on the budget and submit it.
  • Periodically review the budget and look for gaps.
  • Track the performance and, if necessary, make the appropriate corrections.

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.

Summary:

What are the 7 types of budgeting?

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

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