There is one element that is common and ever-present in almost all of our daily financial transactions: our budget. With careful planning, we can estimate how much we would need for a given time and activity. Being sure to be as realistic as possible, and making sure sure that all needs are met while not stretching the budget too thin. But even the best laid plans of mice and men can go awry at times. We sometimes find ourselves hedging between options, or worse, borrowing money to cover up for our financial deficits. Situations like these occur so often that it sometimes makes our budget irrelevant. Deficits are sure to come around; the reason behind this is that we commonly base our thoughts on fixed budgeting! As the name implies, this is not versatile enough for many situations. Advantages of Having a Flexible Budget over a Fixed Budget
However, there is one way that would help our financial planning go smoothly: flexible budgeting. This is a type of budgeting that adjusts or flexes for changes in volumes of activity. The use of flexibility in a budget, with its ability to compensate for the amount of activity involved, is more use than a static budget which needs to remain at a specific amount regardless of increase or decrease in activity. In short, flexible budgeting adjusts for varying rates of activity. With flexibility in a budget, the adjustments needed can be made depending on activity levels such as units produced, clients served or inputs taken. Making use of a static budget does not allow for changes in the level of activity involved. —- My name is Darren and I have a keen interest in all financial issues. I run the Loans Finance Website. If you are interested in finding out more information on financial issues then I recommend the following article: Flexible budget.
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