Budgeting process

A budget is simply a plan for your money

Budgeting is a cycle:

  • step 1 – prepare: estimate your expected money coming in, money going out and money set aside for later use as accurately as you can;
  • step 2 – create: ensure your money coming in equals your money going out and money set aside for later use– this is your budget;
  • step 3 – implement: put the budget in place and refer to it when making decisions;
  • step 4 – review: on a regular basis compare what actually happened against your estimated budget and use this information to adjust for your next budgeting period.

The budgeting cycle

An image of the budgeting cycle
Description

The diagram shows a blonde woman with a pink shirt looking thoughtfully at the budgeting cycle.

The diagram has a light blue background. The bottom of the diagram has a green strip which resembles grass. In the centre of the image is a large circle which represents the budgeting cycle. On either side of the circle there is an image of the blonde girl. On the left-hand side of the circle the blonde girls is sitting on a brown wooden bench with a laptop on her lap. There is an image of a lightbulb above and to the right of her head, she is smiling and pointing her finger in the air while looking up at the lightbulb. On the right-hand side of the circle the blonde girl is standing looking at the budgeting cycle. She has one hand on her hip and one hand on her chin to show that she is thinking about the budgeting cycle.

In the center of the diagram there is a dark blue circle outlined in white. The words “Budgeting cycle” are written in white in the middle of the dark blue circle.

Attached to the outside edge of the dark blue circle outlined in white, there are four evenly divided sections to represent the four steps in the budgeting cycle. Each of these four main sections curves around the outside edge of the dark blue circle. These four sections are each in the shape of an arrow to illustrate the direction of the budgeting cycle. The four arrows join together to form a circular shape.

The curved arrow in the top left corner of the large circle is yellow and is outlined in white. Within this yellow arrow it says “Step 1: Prepare” written in white. To the right of this writing there is an image of a clipboard with a checkmark. Underneath the words and the image, it says “Beginning of the month” in small black letters. The yellow arrow is pointing to the right where the yellow arrow joins with a curved green arrow. The green arrow is outlined in white and is at the top right of the large circle. Within the green arrow it says “Step 2: Create” written in white. To the right of this writing there is an image of list written on a piece of paper with a pencil next to the piece of paper. Underneath the words and the image, it says “Beginning of the month” in small black letters. The green arrow is pointing downwards where the green arrow joins with a curved purple arrow. The purple arrow is outlined in white and is at the bottom right of the large circle. Within the purple arrow it says “Step 3: Implement” written in white. To the left of this writing there is an image of a list written on a piece of paper with three gears linked together next to the piece of paper. Underneath the words and the image, it says “Throughout the month” in small black letters. The purple arrow is pointing the left where the purple arrow joins with a curved orange arrow. The orange arrow is outlined in white and is at the bottom left of the large circle. Within the orange arrow it says “Step 4: Review” written in white. To the left of this writing there is an image of a list written on a piece of paper with a magnifying glass next to the piece of paper. Underneath the words and the image, it says “End of the month” in small black letters. The orange arrow is pointing upward where the orange arrow joins with the original yellow arrow from the beginning and the cycle continues.

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