1st Time Budgeter
Managing a Budget for the First Time
Managing a budget for the first time can be intimidating. However, with a little training and patience with yourself, the task can be mastered with relative ease. I want to start by mentioning several key benefits of managing your budget.
Develop Your Skills: When managing a budget, you will develop new skills such as forecasting, strategic thinking, and decision-making. These are not only helpful skills they will also help advance your career with your current employer and perhaps a new employer down the line, helping to maintain constant career progressions.
Increased Responsibility and Trust: You have been given this responsibility since senior management trusts you. This confidence will likely boost your confidence and may open doors for you in the future.
Challenges to budget management and some of them are:
Accurately Estimating: A significant challenge, especially for first-time managers, is ensuring the budget estimates are accurate. This means you need to have a basic understanding of the organization’s finances and how your piece of the pie fits. For example, is your budget part of a larger budget? If so, you will need to understand how it fits into the bigger picture since a mistake on your part may cause others difficulties.
Flexibility of Funds: There is a difference between monitoring a budget and managing a budget. The former is when you keep an eye on a budget and let someone else know if it needs adjustments. The latter is when your management of the budget gives you certain powers to shift monies around in that budget. For example, if you have overspent in one category you can shift money from another category to balance the budget categories without running the overall budget into a deficit.
Balancing Revenues and Expenses: Being certain that revenues consistently exceed expenses is a fundamental principle of budgeting. You need to have more income than expenses. If you do not forecast you may find yourself in for an uncomfortable surprise.
Budget Modifications: Changing the budget (for good reasons or bad) is known as a budget adjustment. If you see that you need to adjust your budget it is important to let your supervisor know quickly. It is also a good idea to go to your supervisor with concrete recommendations on how you think the problem can be best addressed.
Stakeholders: Having a good relationship with your supervisor that has Profit and Loss (P&L) responsibility is key, especially in the early stages. Every supervisor is different, and each will react differently to budget adjustments.
Budget Accuracy: The first step is determining if the budget is accurate. This is critical in case there is a problem baked into the cake. Before taking responsibility, you must review it with your supervisor. If you have concerns or are confused, make sure you receive an answer that makes sense.
Authority: In your initial conversation with your supervisor, you need to understand the budget, but you also need to know the parameters of your authority. This includes whether or not you have the ability to adjust the budget with or without permission. This is important since you do not want to make decisions you do not have the authority to make or make promises you cannot keep with your subordinates.
Mentorship: The value of having a relationship with someone who has walked in your shoes is considerable. The best way to find a mentor is to identify someone who has it together and ask them to meet every two weeks until you get a handle on the budget process. People will rarely turn down a request such as this since it is flattering and most people genuinely want to help others.
Professional Education: Workshops and conferences are excellent way to network with other professionals, learn from speakers, and gain insights into budgeting practices.
Remember, managing your first work budget is a learning experience, and utilizing these resources can greatly enhance your knowledge and confidence in this new task.
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