Managing a Budget

Setting and Sticking to Financial Targets

© iStockphoto/lisegagne

Being finance savvy is almost always an important component of your overall value to your employer. Even if you are not in a position that has direct responsibility for budgeting, being aware of financial concerns is highly important.

As a manager, your performance is judged heavily on sticking to a budget, and rightly so. For an entire organization to make the profit it wants, it's vital that each area sticks to its budget – after all, budget over-runs come right out of profit.

Clearly, overspending is bad. But under-spending is also a problem – if you have over-estimated what you need, you've tied up money which could have been used more profitably elsewhere in the organization.

You therefore need to be crystal clear at all times about how much you're actually spending in relation to your budget: After all, it would be disastrous to pay too little attention to it in the early part of the year, only to run out of money in month 10!

When you manage a budget well, your organization benefits. And anything that is good for the organization's bottom line is generally good for your career. That's why it is so important to get your budget correct from the start, and then find a way to make it work despite the obstacles that inevitably crop up.

There are two main components of successful budget management:

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