To homemakers, a budget is an essential factor to keep the financial equilibrium of the entire household. To staff members, budgets get in the way of proposed activities. To finance committees, budgets hold staff members accountable. To most, it consumes too much time and effort. However, budgets are important to any person or organization's success. The Australian National Audit Office has identified the advantages of activity based budgeting: The Advantages - Output costs are supported by a schedule of costed activities - Opportunities to examine work processes - Identifies non value-adding activities that can be eliminated - Basis of a performance measurement system and direct link between strategic goals and operational realities - Enables cost profiles to be managed - Accurate costing data for operational management - Costs are transparent, understandable and actionable Disadvantages - Activity definition may become too detailed and the model may become too complex and difficult to maintain - Underestimation of the task of collecting activity driver data - Implementation may be considered a financial management fad and there is insufficient commitment from operational managers Activity Based Budgeting Disadvantages - Usually requires buying Activity Based Budgeting software - Requires training of all managers including budgeting department - Requires people to really understand what drives their budget - Eliminates excuse that activity volume changed because it makes visible volume changes - Requires everyone to collect or estimate activity volume By understanding how resources are transformed into products or services, and byfocusing on the cost of activities, activity based budgeting helps an organisation to obtain a greaterunderstanding of how costs behave in their organization and which activities create significant amounts of cost. The first thing that you budget for yourself is, of course, food. Without food, you would not acquire the energy that you need to do the things you do daily. This fact, alone, makes food the most important necessity, which summarizes that it must be the first thing you should concentrate your budget on. If you want to go down the pool of debt then own ten. Keeping ourselves away from temptation is the first step to effective finance budgeting and financial control. 2. ELIMINATE WASTE A new pair of shoes is considered a waste if you still own four workable sets of pumps. Expensive toys that you just display on the dusty corner, the set of paperbacks lined on the bookshelf but left untouched, dining out when you can cook at home, are all waste of money. With budgeting, you will learn how much you are currently spending and how you can successful decrease your expenditures to help you make good savings for the rainy days. You are spending on a regular basis. Home payments and maintenance, utilities, auto maintenance and payments, insurance payments, child care and alimony, education, food, clothing, entertainment and travel are just few of the many things you spend your money on regularly. Simple reminders on paying your utility bills and credit card bills on time, and updating you on your savings account are very helpful features of budgeting software. Without a good system, your bills can pile up and you find yourself jolting out of complacency when it is time to pay them. Debt problems are another obstacle that blocks your financial freedom.