budgeting- is the allocation of money/ time to undertake a particular last. e.g. travel/ staff budget. It may be over a specific task such as a project, or a time period or both. As this is an allocation it is only proposed.
If a budget (as a guide) is not accurate this leads to over and under spending.
Budget- proposed resource allocation
actual- actual resource used
variance- different between the two (may be positive or negative or neutral.)
cumulative variance- the variance as a cumulative spend across the project.
over time the budgets you propose will become more and more exact and accurate. They help you to understand where and how your costs vary and are different to expectation.
Its good practice when spending a budget to out aside a buffer, maybe around 10% just in case issues arise you weren't aware of.
As you spend more of the allocated budget, you should keep a record of the finances as they stand, with the remainder of the money listed you have left available.
