DECREASE DEBTS ONE AT A TIME The amount of debt left unpaid increases overtime due to interest rates. To keep yourself and family from sleepless nights due to debts, start budgeting your finances with special interest on decreasing debts. Write down in your budget pad or software every debts you have, even the small ones. It is easy to put off saving until next month, but you never know what will come up that will change your plans. So instead of putting it off, begin by making a small, automated contribution to your savings account just after each paycheck. Even as little as $10 a paycheck can add up fast in a short period of time. Factors are given adjustments to arrive at the figures of current year's budget. On the other hand, zero base budgeting starts from scratch. Previous year prices are not used for any calculation. In zero based budgeting you are given a fixed period of time, the next quarter or year for example. You are asked make a justification on the proposed expenses during that time period solely on their rewards. The Australian National Audit Office has identified the advantages of activity based budgeting: The Advantages - Output costs are supported by a schedule of costed activities - Opportunities to examine work processes - Identifies non value-adding activities that can be eliminated - Basis of a performance measurement system and direct link between strategic goals and operational realities - Enables cost profiles to be managed - Accurate costing data for operational management - Costs are transparent, understandable and actionable Disadvantages - Activity definition may become too detailed and the model may become too complex and difficult to maintain - Underestimation of the task of collecting activity driver data - Implementation may be considered a financial management fad and there is insufficient commitment from operational managers Activity Based Budgeting Disadvantages - Usually requires buying Activity Based Budgeting software - Requires training of all managers including budgeting department - Requires people to really understand what drives their budget - Eliminates excuse that activity volume changed because it makes visible volume changes - Requires everyone to collect or estimate activity volume By understanding how resources are transformed into products or services, and byfocusing on the cost of activities, activity based budgeting helps an organisation to obtain a greaterunderstanding of how costs behave in their organization and which activities create significant amounts of cost. In this way you will keep track of your spending and think twice next time on purchasing on an impulse. To those who think you know where your money goes without detailed records, keeping track of every cent you spend for one month will tell you otherwise. You will be surprised by how much some of what you think are small expenditures add up to. Lunches, coffee, parking ticket, beers, movies and the like are hard to remember unless you write them down as soon as they are incurred. As you go on with your budgeting, you can add more categories. Modification is constant for spending is not only limited to your regular expenditures. Irregular expenses include travel, gifts and charity, among others.