Finance software lets you track all your check writing by category and makes monthly comparisons of your actual spending to the amount you've budgeted. Use a debit card instead of your credit card. This way, the amount you're spending is the amount that is actually in your hands. Credit card allows you to spend over and above your current budget, which is bad, especially if you are not expecting any money to come in anytime soon. In the creation of this budget entails a multi-step process that involves many people in the household or organization. Non-financial people involved in the procedure normally needs some financial training to help maximize their effectiveness in budgeting. After some period of time, participants become more comfortable with the process and work hard to improve the benefits of having one. 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. Far too often small business gain good profits, but they do not have enough operating capital to meet their needs. Consequently, they may be forced to sell out to a stronger competitor or close the door and put the company out of business. But with budgeting and forecasting, this small business will be slowly on its way to becoming big and strong enough to withstand the demands of the competitors and the entire market in general. Most often than not, people pay utility bills and buy luxurious items before they a realization that there is no room to save money for other necessary expenses anymore. Zero based budgeting helps in the prevention of this problem. Zero based budgeting is a method of budgeting in which all expenses must be justified in each new period, as opposed to only explaining the amounts requested in excess of the previous period's funding. To ensure your goals can be achieved, write all the numbers down so you can do a trial and error as many times as necessary. Mistakes are far less costly when made on a piece of paper than with actual money. The process and mechanics of business budgeting vary by organization. Generally, budgeting consists of the following three phases.