Comprehensive Budget

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Budget is an estimate of income and expenses for a particular period of time. It is also a projection of the financial requirements and consequences of a plan (Siegel & Yacht, 2009). There are different types of budgets, comprising of various components. Each of these components serves different purposes and are related to one another. In order to make better personal financial decisions, financial tools are required. All these will be discussed in this essay.
The two main types of a budget are comprehensive budget and specialize budget. A comprehensive budget is a type of budget that includes all aspect of our financial life. It consists of operating budget and capital budget. Operating budget is an estimate that shows our recurring income and expenses. Such budget is related to our short-term goals. Examples of recurring expenses and income include, living expenses and incomes from wages, salary, dividend, and interest. The purpose of operating budget is to serve as a financial tool to manage choices in achieving our short-term goals. This is because our “recurring incomes and …show more content…

According to Siegel & Yatch (2009), a specialized budget is included in the comprehensive budget as it is part of the total financial activities. Thus, the relationship between the specialize and comprehensive budget is that all estimates and expenses in the special budget are also found in the comprehensive budget. For example, cash flow budget which is a type of specialize budget is created from the comprehensive budget. (Siegel & Yacht (2009), stated that one can create a cash flow budget for an asset or activity by segregating its income and expenses from the comprehensive budget. This way, specialize budget can be prepared using the income and expenses that are segregated from the comprehensive budget. This will make it easier to project the outcome of choices on that assets or

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