The Three Numbers in Every Budget

Someone shares a budget spreadsheet and asks what you think. It looks like a hundred numbers. It is not. Almost every budget is the same three numbers, repeated down the page. Learn those three and you can read any budget in any company. Start with one row.

The first column is the budget. It is the plan, written before the money was spent. Someone guessed in December that travel would cost forty thousand this year. That guess is now a line in the sheet. A budget number is not a fact. It is a promise made in advance.

The second column is the actual. This is what really happened. Finance adds up every invoice and every expense claim, and the total lands here. Travel came to forty-six thousand. Nobody argues with an actual. It is history, and it only changes when the books close at the end of the month.

The third column is the variance. It is the second number minus the first. Forty-six thousand against a plan of forty thousand is a variance of six thousand. You spent more than you promised, so you are over budget. Spend less than the plan and you are under budget. That is the whole word.

So the only real question in a budget meeting is about the third column. Nobody wants a lecture. They want one sentence per big variance. Try this: "We are six thousand over on travel because we added the Berlin trip in March." Say the number, then the reason. That is the whole job.