Which type of budget is best? Check Answer at BYJU’S (2024)

FAQs

Which type of budget is best? Check Answer at BYJU’S? ›

Deficit budgets are better suited for developing economies. Whenever there is a recession, a deficit budget will help in generating employment and boost the economy.

We recommend the popular 50/30/20 budget to maximize your money. In it, you spend roughly 50% of your after-tax dollars on necessities, including debt minimum payments. No more than 30% goes to wants, and at least 20% goes to savings and additional debt payments beyond minimums.

There are three types of government budgets: balanced, surplus, and deficit. A balanced budget ensures economic stability and prevents imprudent expenditures, but it is not suitable for times of economic depression or deflation.

A balanced budget (particularly that of a government) is a budget in which revenues are equal to expenditures. Thus, neither a budget deficit nor a budget surplus exists (the accounts "balance"). More generally, it is a budget that has no budget deficit, but could possibly have a budget surplus.

When a government spends more than it collects in tax revenues, there is a deficit. Conversely, if there is more collected than spent, there is a surplus.

Incremental budgeting

It is the most common type of budget because it is simple and easy to understand. Incremental budgeting is appropriate to use if the primary cost drivers do not change from year to year.

In the 50/20/30 budget, 50% of your net income should go to your needs, 20% should go to savings, and 30% should go to your wants. If you've read the Essentials of Budgeting, you're already familiar with the idea of wants and needs.

There are three common types of budgeting — Incremental, Zero-Based, and Activity-Based Budgeting. Each approach brings its own strategic advantages to the financial planning table.

Basic Budgeting Method #1: The Classic Budget

Listing out your expenses, line by line, is a tried-and-true budgeting strategy. Get started by listing all of your monthly expenses in rows. This includes the needs (your rent or mortgage payments, car payments and insurance, cell phone bill, groceries, etc.)

A master budget is the central financial planning document that includes how a company will spend and how much it expects to earn in a fiscal year. A master budget contains budgets of departments within the organization and projections that allow for management to plan for the upcoming year.

What is a good balanced budget? ›

A balanced budget is a financial plan allowing an individual or company to determine the revenue required to ensure they equal the organization's projected expenses. This tool can help organizations better understand their expenses and make positive financial and business decisions.

Final Budget means the adopted budget adjusted by all revisions throughout the fiscal year as of June 30.

A budget surplus can often be an indicator of a healthy economy. But it is not necessary for a government to maintain a surplus. The U.S. has rarely run a budget surplus and experienced long periods of economic growth while running a budget deficit, which is the opposite of a surplus.

The budget surplus formula is: S = T - G - TR. If S is positive, the government has a budget surplus. A budget surplus can arise due to higher tax revenue, lower government spending on goods and services, lower transfer payments, or some combination of all of these policies.

A surplus is when you have more of something than you need or plan to use. For example, when you cook a meal, if you have food remaining after everyone has eaten, you have a surplus of food. You can choose to throw the food out, stockpile it, or try to find someone else, like a neighbor, who wants to eat the food.

The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings. Learn more about the 50/30/20 budget rule and if it's right for you.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

Participatory Budgeting approach is most favorable to obtain employee support. Favorable Budgeting Approach to obtain employee support: Participatory Budgeting Approach is also known as Bottom-Up Budgeting Approach.