It’s rather a guide to assist you in making better financial decisions, and it can be an effective tool for identifying areas for improvement. Understand what a budget really is - a budget is not meant to manage every dollar you spend. Adjusting a long-term forecast every quarter, month or week, on the other hand, allows to continually improve the accuracy.įorbes put together 10 tips for stellar budgeting: If not fixed, even small mistakes can compound over time and affect strategy.

Plan faster and more frequently – if budgets are inflexible and a crucial forecast can’t be adjusted, the person making it excessively stressed over the budget accuracy. Shift the focus from financial precision to strategic success – a good approach is to turn the targeted outcomes developed in step one into strategic portfolio guidelines that drive the budgeting and adaptation process, which will spark discussions that allocate resources from the strategy down, rather than from individual projects up. Next, monitor activities within each department to ensure the team members stick to plans and deliver desired results. Then, order each business department and function to execute the plans that will add up to the targeted total. First, forecast exactly what the company must do to deliver stable trends in earning per share (EPS). In the article, “An Agile Approach to Budgeting for Uncertain Times,” Harvard Business Review (HBR) discusses the three things you can do when budgeting during uncertain times:Ĭhange the purpose of planning and budgeting – planning and budgeting models are designed to help senior management forecast, command and control. Budgeting is tricky as is, but it becomes especially challenging in difficult times, such as the COVID-19 pandemic of 2020.

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