Budgeting for business and personal expenses

Types of Budgeting

There are several budgeting types that each prioritize different factors when approaching a financial plan. These include:

1. Zero-based budgeting, which sets each item at zero dollars at the start of periods before reallocating
2. Static budgeting or incremental-based budgeting, which uses historical data to add or subtract a percentage from the previous period to create the upcoming period’s budget
3. Performance-based budgeting, which emphasizes the cash flow per unit of product or service
4. Activity-based budgeting, which starts with the company’s goals and works backward to determine the cost of attaining them
5. Value proposition budgeting, which assumes no line item should be included in the budget unless it directly provides value to the organization