Financial Management & Digital Accounting · Beginner level

Beginner level · Module 2: Payroll and Budget Preparation · Lesson 3 of 3

Building a Monthly Budget

Plan income and spending for the month ahead.

In this lesson you will

  • Structure a budget by line
  • Estimate income and costs realistically

Key concepts

budgetbudget linesestimatescontingency

The lesson

A budget is a plan of expected income and expenses for a period, organised by lines such as sales, rent, salaries, transport and supplies.

Base estimates on past records, known prices and planned changes. Note the assumption behind each line.

Add a small contingency for unexpected costs, and compare actual results with the budget every month.

Step by step

  1. List income and expense lines.
  2. Estimate each from past records.
  3. Note assumptions.
  4. Calculate the expected surplus or deficit.

Practice activity

Build the monthly budget for the organisation.

Expected result: A budget with documented assumptions and a contingency line.

Check your understanding

  1. What is a budget?

    Show answer

    A plan of expected income and expenses for a period.

  2. Why note assumptions?

    Show answer

    So estimates can be checked and updated.

Taught live by an instructor — online or in person. Free course lessons are for self-study and do not lead to a certificate — see registration options.