Without it you muddle through, unable to stay on course because you have no course charted and you have no equipment for steering through the currents that constantly swirl around you. Traditionally, many people managed their money by dividing their cash into several paper envelopes. These envelopes are for food, entertainment, utilities, insurance, vacation, etc. You are the only one who will refer to it on a daily basis so go ahead and make it your own. This way, it will also look more familiar to you. Many people purchase items with credit card more often than they would with cash. Always remember that it is better to buy items with cash as you are already free from obligations in the future. Examples of these would be clothes and tax payments. You can leave your budget for an hour or so and come back to your checking, this way you can see things that you may have missed for the first time. A budget should not solely be concentrated on expenditures alone. In your home budgeting, include your income as well. Personal budgeting doesn t only help you in terms of saving money but it also helps you in other areas. Personal budgeting can help you be more independent. You learn to lean on your own shoulder, which is hard to do, mind you. And you also learn to be more resourceful. You get to use things that you never imagined you would use, and discover many uses that a certain thing can have. However, budgets are important to any person or organization's success. Budgets are guides to show the allocation of resources. Such would include money, time, equipment, and space in order to accomplish a certain task. In effect, they are dollars-and-cents representations of plans for the production of meaningful results during the upcoming year or period of time. With the advent of powerful and low-cost database systems, activity based budgeting is allowing businesses to reduce costs, better utilize resources, and achieve strategic objectives. 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.