Creating a personal budget is an important task for everyone to consider as we enter the new year. I thought it might be helpful to share how we create our annual budgets at Values Into Action. The budget is essential because it helps us plan how to meet our everyday needs and achieve our mission. Creating a budget involves several steps and many people. Here’s how we go through the process each year.
1. Review the Past Year
Creating a personal budget is an important task for everyone to consider as we enter the new year. I thought it might be helpful to share how we create our annual budgets at Values Into Action. The budget is essential because it helps us plan how to meet our everyday needs and achieve our mission. Creating a budget involves several steps and many people. Here’s how we go through the process each year.
2. Establish a Plan and Set Goals
Once we understand how we did in the past year, we look at our current Strategic Plan and set our goals for the upcoming year. These goals are then added to the budget. If there are goals that need more investment, like improving our infrastructure, we will include the costs for those goals. If there are plans to reduce spending in certain areas, we will remove those costs from the budget.
3. Estimate Income and Sources of Funding
After setting our goals, we revise our income numbers to reflect any changes in our funding. This means adding up all the money we expect to receive for the year, including service authorizations, rate changes, grants, contracts, and any other income such as donations or interest. This gives us a clear picture of the total income available to help us carry out our mission.
4. Estimate Expenses
Next, we list all the expenses from the previous year and make adjustments for any expected changes. This includes accounting for inflation, salary increases, staffing needs, and one-time expenses that won’t happen again. We also look for areas where we can be more cost-effective in achieving our goals. At this point, we also review any areas where we might face budget shortfalls and discuss how to handle them.
5. Involve Stakeholders and Approve the Budget
Once we have the first version of the budget, we share it with the Executive Team for review. If anything needs to be changed or looked at again, the Finance & Administration team will revise the budget. Once everyone is satisfied with the budget, it is presented to the Board of Directors for final approval. Once approved, the budget is ready for use in the new fiscal year.
6. Monitoring and Adjusting
After the budget is approved, the Finance and Administration team keeps track of how the budget is performing throughout the year. We run monthly checks, prepare financial statements, and share the reports with the Executive Team and Board of Directors for ongoing review. Throughout the year, unexpected changes may come up, and the leadership teams will discuss and adjust the budget if needed. These adjustments will be included in next year’s budget.
In Closing:
Creating a budget is a key step for every organization. At Values Into Action, this process helps us ensure we are making the most of our resources and staying focused on our mission. By reviewing past data, setting goals, estimating income and expenses, and involving the right people, we are able to plan for a successful year ahead.