How often should the budget be updated?
Posted: Wed Jan 29, 2025 5:23 am
6. Repeat every quarter or any period you choose.
How often you update your budget is up to you. In the steps above, we chose a quarterly review. But if you have the time to sit down each month and adjust your budget based on your actual performance, do it. We suggest choosing a frequency that works for you and sticking to it, whether that’s monthly, quarterly, or semiannually. Just don’t set it and forget it.
If you do nothing else, be sure to spend some time comparing your budget to your actual expenses and income at the end of the year. While this information won’t be as actionable, you’ll at least discover important lessons that you can incorporate into next year’s budget.
Testing different scenarios with your financial model
Your financial model can be used throughout the year to test different scenarios and how they affect your P&L. Here is one simple example of how you can use a model to understand different possible outcomes:
Let’s say you’re making a chocolate bar with almonds as the egypt mobile database main ingredient. You initially budgeted the cost of almonds at ₽2,500 per kg. Then a drought hits Ossetia, where 80% of your almonds are grown, and the cost of almonds skyrockets to ₽4,000 per kg. This is where your financial model comes into play. Assuming you’ve built your model correctly, you’ll be able to go to the Assumptions tab and change the price of almonds from ₽2,500 to ₽4,000. Your entire income statement will update to show you how this significant cost increase will impact your profit for the year.
How often you update your budget is up to you. In the steps above, we chose a quarterly review. But if you have the time to sit down each month and adjust your budget based on your actual performance, do it. We suggest choosing a frequency that works for you and sticking to it, whether that’s monthly, quarterly, or semiannually. Just don’t set it and forget it.
If you do nothing else, be sure to spend some time comparing your budget to your actual expenses and income at the end of the year. While this information won’t be as actionable, you’ll at least discover important lessons that you can incorporate into next year’s budget.
Testing different scenarios with your financial model
Your financial model can be used throughout the year to test different scenarios and how they affect your P&L. Here is one simple example of how you can use a model to understand different possible outcomes:
Let’s say you’re making a chocolate bar with almonds as the egypt mobile database main ingredient. You initially budgeted the cost of almonds at ₽2,500 per kg. Then a drought hits Ossetia, where 80% of your almonds are grown, and the cost of almonds skyrockets to ₽4,000 per kg. This is where your financial model comes into play. Assuming you’ve built your model correctly, you’ll be able to go to the Assumptions tab and change the price of almonds from ₽2,500 to ₽4,000. Your entire income statement will update to show you how this significant cost increase will impact your profit for the year.