What are the advantages and disadvantages of a solid budget?

A fixed budget is a financial document that remains the same during the financial period, regardless of any unexpected and spontaneous events that may manifest. On the other hand, flexible or variable budgets change from time to time on the basis of changes in expenditure. The advantages of a solid budget include greater stability, better savings and easier future planning, while disadvantages include reduced flexibility. As a result, it is particularly difficult to respond to the type of unexpected changes that usually occur in the business world, and to life in general. For this reason, however, most large conglomerates prefer flexible budgeting over fixed budgeting. Fixed budgeting means determining the maximum expenditure limit, which means that the individual or owner of the company does not have to spend around this point. This is beneficial because it prevents it from crossing the whim. If, for exampleThe limit.

Another advantage of a fixed budget is that it would force a person to direct this bonus to his savings account. With a flexible budget, he could decide to assign it to spontaneous purchase, such as TV or high -resolution notebook. In fact, they have to wait until the next fiscal year, when it can adjust the budget by increasing the permitted amount of disciple expenditure.

The biggest advantage for more controlled expenses and improvement of savings resulting from the fixed budget is the greater future. Moreover, this money postponed to savings could become extremely important if an accident should occur. Or a person can marry, have a child and suddenly realize that he and his wife must establish a college fund.

A solid budget is an optimal choice for owners of small businesses and individuals. Provides a level of stability and control that cannot be found in a flexible dissolutionotto. However, the problem with fixed budgeting is that it does not work well in the business world, where the market is constantly fluctuating.