![]() ![]() And if you don’t have enough savings to cover the purchase, your budget can help you find other ways to make up the difference. A budget encourages you to save for major purchases, like a home or vehicle. ![]() It lets you know how much money is coming in and where it’s going. It uses more realistic forecasts and can therefore be more accurate when predicting outcomes.įixed budgets do not allow for contingencies that may arise.Ī flexible budget can easily incorporate contingency into the budget.Ī budget is a tool that helps you track your income and expenses so you can make informed financial decisions. It tends to be more conservative and generally uses pessimistic forecasts which can overestimate income and underestimate expenses resulting in a loss of potential profit. The best advantage of a flexible budget is that it allows for a more accurate reflection of actual performance and more efficient resource allocation. The best advantage of a fixed budget is that it provides a clear plan for resource allocation and cost control. It accounts for variable costs such as materials or labor.Ī fixed budget is used and suitable for businesses where income and expenses are relatively stable from one period to the next.Ī flexible budget is suitable for businesses where income and expenses can vary greatly from one period to the next. ![]() It focuses on static line items such as rent or salaries. Key Differences Between Fixed And Flexible Budgetįixed Vs Flexible Budget (Comparison Chart) Fixed BudgetĪ fixed budget refers to a financial plan that allocates a set amount of money for specific expenses.Ī flexible budget refers to a financial plan that allows for adjustments to be made based on actual or expected changes in income or expenses.Ī fixed budget can be created at the beginning of a period, such as the fiscal year, and remains unchanged throughout that period.Ī flexible budget can be created at any time and can be adjusted as needed.Fixed and Flexible Budget – Main Difference.Fixed Vs Flexible Budget (Comparison Chart). ![]()
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