Good

1. Unit of competency
Develop and use personal
budget

2. Our discussion will be categorized into the following
Three main contents.
Part I:- Elements of the competency
 Analyze and discuss budgeting as a financial tool
 Develop a personal budget
 Implement and monitor the personal budget
 Performance criteria
 Key variables and Ranges
Part II: Introduction to Budget in General
 Define the concepts of budget in General
 Distinguish the difference and similarity among planning and budgeting
 Explain the role & functions of a budget in management function
 Identify and discuss characteristics of budgeting
 List out the Advantages and benefits of budgeting
 Mention the different classification and types of budgets
Part III:-Preparation of personal budget
 Discuss the concept & Contents of personal budget
a. Meaning of personal Budget.
b. Contents personal budgets
c. Major Issues and Structures of personal budget Preparation
I. Prepare estimated personal budget
II. Prepare budget performance report
III. Prepare Budget Allocation
 Illustrative example under each cases
Contents

3. 1.2 Introduction to budget in General
 The following four major issues will be discussed in this section of our
presentation
A. Defining the concepts of budget and budgeting
B. The Role and Functions of a budget
C. Characteristics of Budgeting
D. Advantages and Benefits of Budgeting
 Based the discussion you are expected to do the following questions at the end
Self check 1.2
A. Distinguish the difference and similarity among Plans Vs planning and Budget &
budgeting
B. what are the two main roles of budgets and the major functions of budgeting
C. what are the basic characteristics of budgeting and what is the usual time period
covered by a budget?
D. mention at Least four major advantages or benefits of budgeting

4.  Budget is the quantitative expression of a proposed plan
of action by individuals & management of business for a
future time period and is an aid to the coordination and
implementation of that plan.
 It is a listing of expenses and income in different groups
under different stages for future time period.
What is budget?

5. o personal budget:- are an allocation of funding given
to users after an assessment which should be sufficient
to meet their assessed needs.
 It is based on estimation and it has two
columns.(description or item with budgeted amount)
o Budget performance report:- it is a process of
comparing estimated budget amount with actual
(released) amount to get either surplus or deficit
amount from income or expenses.
 It has four columns by included: description,
estimated amount, actual amount and variance.
Types of budget for individual
(personal level)

6. Continued…..
 The other original name of budget performance report is budget
variance.
o Budget allocation:- is a process of allocating surplus or deficit
amount from variable, by taking from previous month to
allocating current month.
 It has four columns, and it included description, current month
budget amount, variance (surplus and deficit) amount from
previous year and allocating budget for current moth.

7.  ATO BNIYAM is an employee of ALEM genet general hospital
and his monthly budgeted and actual income and expenditures
was given:
 Budgeted and actual income and expenditures for January:
Description budgeted actual
amount a mount
 Salary----------- ---------5000---------------5000
 Cloth----------------------500-----------------400
 Food-----------------------200-----------------250
 Recreation----------------150---------------- 200
 Car ------------------------450-----------------450
 Miscellaneous -----------700-----------------700
 Rent------------------------800 -----------------800
Example

8.  Continued………
Budget for February:
Description budget for
February
Salary---------------------------------5000
Cloth-----------------------------------500
Food------------------------------------200
Recreation-----------------------------100
Car -------------------------------------450
Miscellaneous ------------------------700
Rent-------------------------------------900

9. Continued…..
Task1. determine the personal budget for the moth of
January31, 2011
Task2. determine the budget variance for the month of
January31, 2011
Task3. determine the budget allocation for the month of
February28, 2011
Task4. calculate the percentage of saving for the moth of
January and February?

10.  Task1. determine the personal budget for the moth of January?
ATO BINIYAM
personal budget
for the month of january31, 2011
Description estimated budget
amount
income
salary -------------------------------------------------------------5000
expenditures
Cloth------------------------------------------------500
Food------------------------------------------------200
Recreation------------------------------------------150
Solution to examples

11. Continued
Task2. determine the budget variance for the month of
January31,2011?
ATO BINIYAM
budget performance report
for the month of january31, 2011
Description estimated actual
variance
income amount a mount
 Salary 5000 5000 0
Expenditures
 Cloth 500 400
100
 Food 200 250
(50)

12.  Continued…
Task3. determine the budget allocation for the month of February28,
2011?
ATO BINIYAM
budget allocation
for the month of february28, 2011
Description budgeted for variance of
allocated to
Income February January
February
Salary 5000 0
5000
Expenditures
Cloth 500 100
600

13.  Continued…….
Task1.4. calculate the percentage of saving for the moth of January
and February?
• Percentage of Saving for the month of January:
personal saving /total income *100%= 2200/5000*100%
= 44%
percentage of saving for the month of February
personal saving / total income *100%= 2200/5000*100%
= 44%

14. Thank you!!!!!!!!!