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. This way, you do not need to pay extra for your household helpers, and at the same time, you learn how to do household chores on your own. Budgeting tips can sure do miracles for those who are overly dependent on their maids. Clothes need not be branded. You do not go out for other people to check the tag on your shirt. But it doesn't have to be that way. Financial budgeting is essential to give you control over your financial life. You can simply begin to put some of your savings toward the goals you really want to achieve some time in the future. Such plans may include a family vacation to Disney World or the construction of a new deck for the house. Investing Make an investment plan - Savings are meant to keep us warm during stormy nights; and when used wisely, savings can help us achieve financial freedom before we actually retire. Make an investment out of your savings to generate income. For first time investors, use twenty-five percent (25%) of your savings as a start up investment. These deceiving commercials on TV greatly influence your purchasing and personal finance budgeting behavior. It is your job to make a wise decision whether each new product is something that you really need and cannot live without. Some things may make life easier and add up to the quality of life you are living, but it is more important to know whether you can truly afford them or not. You will understand if your expenses are too high and your savings are too low to meet your financial needs that allows you live comfortably. From this initial picture, you can then forecast your expenses for the coming year. Household budgeting tips If this seems too complicated for you, you can start slowly by listing down budgeting tips you read in the magazine or thought of yourself.