Gone are the days when it was down to the financial director alone to keep his or her fingers on the purse strings.
Today a key part of project management in any company means having the budgetary smarts to ensure your project does not wander into the red.
Put simply, budgeting is balancing your expenses with your income. It is something you do every day in your home life.
In the work context, it is about having a comprehensive plan for achieving financial and operational goals. Think of it as a map of your company or team’s strategic plan, which allows you to determine in advance whether you will have enough resources to do things you need or would like to do.
Wherever you are in your career, and however high on the career ladder you intend to go, having the financial acumen to manage a budget will set you apart from the competition as a technologist. It is a key aptitude to have as part of your career-skills’ set.
Keep Your Eye on the Money
You do not have to excel as an accountant to keep track of how your forecasts measure up to your actual spend. Managing budget is in many ways just like managing any other commodity.
Think about how you manage your time, for instance. How do you split up the hours you spend on different tasks? Do you allow for a certain amount of time to complete one thing before tackling another? In a sense, you are “budgeting yourself” as a resource to ensure you deliver what you have promised, right?
That is one example of how you apply your understanding of budgeting as a techie in the workplace.
And it is a great way of demonstrating that, as techie, you take a holistic approach –you have an entrepreneurial mind-set that will set you apart.
How to Manage a Budget
Breaking it down into its constituent parts, a budget is essentially a system of check and balances that underpins a plan. Think of it as an estimate of the costs, resources and revenues that you will have over a fixed period of time.
A key administrative tool, your budget is a plan of action for meeting your objectives. It’s a means of measuring performance. And it is a mechanism to help you cope with unpredictable future problems.
Now how you create your budget is up to you.
There might be a certain way that things get done in your organization that you will want to follow.
Essentially though, you will want to consider the following things for a budget:
- Time period budgeting for (monthly, quarterly, annually)
- Resource/Variable that is budgeted
- Fixed expenses
- Variable expenses
- Actual expenses
- Actual income
- Difference between these two
Fixed expenses are the things that will not change: cost of materials, salaries, that kind of thing.
Variable expenses on the other hand might cover costs that might go up or down – things like fees you pay to cover outsourced products or services.
Now, your forecasts are what you expect to pay for your expenses, and what you expect to make as income.
At the end of the period that you’re budgeting for, you add your actual spend and your actual income.
The final step is to calculate the difference between what you budgeted for – your forecasts – and your actual figures.
Any differences between these two will reveal very useful data for you and your team. You’ll either identify a potential problem which you can then address in the future. Or you can find opportunities that you might previously have missed.
Tips for Budgeting Success
Make the Time
Like any other kind of planning, budgeting needs time and concentration. It’s not something that you will be able to accomplish in fits and starts. So making the time to do it right is absolutely key. As and when it falls to you to draw up a budget, block your calendar and put in the hours to get it right. Think about what you are doing and what you need to achieve.
Talk it Over
Going it alone or rushing is a sure-fire fast track to failure. Good budgeting means bringing together your broad goals and narrowing them to specific plans and metrics through iterative discussion with the appropriate stakeholders. Budgeting should be a group activity. Talking it through with others will help create a narrative to support the numbers, and avoid future potential pitfalls.
Done right, budgeting is a terrific way to identify problems, pain points, potential improvements and new opportunities. Reviewing how you’ve done – as well as your processes and technology – will help you plan more efficiently and confidently for the future.
Apply Your Budgeting Skills
Budgeting skills can be applied to how you manage projects or lead a team. Although your job description might not require traditional budgeting as a skill, once you have the basics under your belt – you can apply it as a non-financial budgeting technique to manage time, resources, etc.