Cash budget

From Financial Literacy Wiki

Cash Budget is a detailed short-term financial forecast of your income and expenditures. It is used to monitor and control cash expenditures and purchases. By spending withing the limits specified in your cash budget, you will then inculcate the habit of disciplined spending thus avoiding unnecessary expenditures.

Besides the routine expenditures, you might want to include your desired level of savings and investment, as specified in your financial plans.

Another use of the cash budget is to monitor if you have any cashflow problems. If the cash budget shows potential problems, you may either evaluate your financial goals or plans. After fine-tuning your plans, reconstruct your cash budget and verify that your goals are achievable and that your financial position is sound.