In this way you will keep track of your spending and think twice next time on purchasing on an impulse. To those who think you know where your money goes without detailed records, keeping track of every cent you spend for one month will tell you otherwise. You will be surprised by how much some of what you think are small expenditures add up to. 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. Budgets are well-known financial tools. 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. Customize your personal finance budget according to your expenditures. 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. 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 better understand zero based budgeting, here's an example: Each department of an organization which uses zero based budgeting would have to justify its funding every year. There really is no need for you to invest in a fancy budgeting tool in order to do a budget, but a good one will make the job easier. Many banks are now offering free PC banking and free personal finance software. You simply dial into the bank's computer or use web-based banking services, and download the checks that have cleared your account, directly into your personal finance software.