A cash budget is an accounting device that is used to effectively monitor and manage the immediate cash flow of a home or business budget. Many people choose to employ a cash approach as a quick and easy way to monitor the financial condition of the household or a small business on a daily, weekly, or monthly basis. Generally, cash budgets are used to manage short-term cash flow by creating an organized means of keeping up with cash receipts and balancing them against cash disbursements during the accounting period.
Part of the genius of a cash budget is the simplicity of the approach. Often, it is possible to employ this principle by using a basic spreadsheet. Creating columns that make it possible to record basic information, it is possible to tell at a glance how much money came in for the period, and how much went out. This is accomplished by recording each cash receipt and cash disbursement on the spreadsheet. Often, the date, amount, and a brief description of the transaction is all that is necessary.
The cash budget is such a simplistic tool that even people who feel they lack any real accounting acumen can employ this approach. Because it is possible to track the cash in and cash out in the same format that is used for a standard check register, most people will find that the process takes very little time. A simply designed budget will provide a helpful look at how well the entity is doing in staying within the approved expenses for the period.
It is possible to keep a cash budget in a simple accounting ledger, or design one using spreadsheet software. Most accounting software programs are also equipped with a simple budgeting feature that will gather data from within the database and provide a quick snapshot of the period under consideration. For persons who do not need a professional level accounting database but do not feel competent to design a cash budget template using a spreadsheet, there are several free downloadable budgeting programs available.