Financial Budget Planning

Financial Management – The Importance of Financial Budget Planning Many believe that financial budget planning is a process of sucking one’s thumb to come up with an attractive looking set of numbers against which we then plot our actual performance.  Actually, budgeting is a science which incorporates a great deal of measurements and observations to come up with realistic numbers designed to show us where we are heading, in fact one should also incorporate into this process, revised forecasts which are prepared continuously, based on changes in the business environment and resulting assumptions. But what happens when the budget does not “balance”? In other words, what happens when the budget has an unfavourable outcome.  Apparently, our current minister of finance Nhlanhla Nene is unable to shed any light there. He says that the economy is expanding too slowly to meet South Africa’s needs. He has not explored the political or economic reasons why this is the case, instead he is exploring ways to squeeze the taxpayer even further. To quote the German Philosopher George Hegel , “We learn from history that we do not learn from history.” What we can instead learn from the past Does anyone remember Reaganomics of the 1980’s? The four pillars of Reagan’s economic policy were to reduce the growth of government spending, reduce the federal income tax and capital gains tax, reduce government regulation, and tighten the money supply in order to reduce inflation. Despite intense economic analysis of Reagan’s term in office, the general conclusion is that the American economy performed better during the Reagan years than in the periods before or after. Some...