Budgets are quantitative plans for the future. … Management should frequently compare data with budgeted projections during the budget period and investigate any differences. Budgeting, however, isn't a substitute for permanent management. Instead, the budget is a crucial tool of managerial control. A budget may be a formal statement of estimated income and expenses supported future plans and objectives. In other words, a budget may be a document that management makes to estimate the revenues and expenses for an upcoming period supporting their goals for the business. Here are the essential steps to follow when preparing a budget: Update budget assumptions Review bottlenecks Available funding Step costing points Create budget package Issue budget package Obtain revenue forecast Obtain department budgets