- One factor that can impact budget decisions is shifts income or revenue received. If you get a raise and suddenly begin earning $200 more a week, you might decide to allocate more money toward certain expenses in your budget. For instance, you might allocate $50 more to entertainment and $100 more to savings. Similarly, if a company suddenly experiences a jump in sales, it might have more money available to allocate to pursuing research and development or advertising. On the other hand, if income declines, a company might be forced to cut expenses. A recession that hurts sales could prompt a company to lay off workers in order to cut labor expenses from the budget to maintain profitability.
- Another factor that can influence budget decisions is the priorities of the individuals making the budget decisions. The CEO of a certain company might feel that a strong advertising campaign for existing products is the best way to increase sales and devote a large portion of income toward marketing. If a new CEO takes over, he might decide to allocate more funds to creating new products instead of advertising existing products. Similarly, a person that allocates $200 a month to eating out might instead decide to allocate $100 of that to a gym membership if he decides to prioritize fitness.
- Political pressures can have a significant impact on government budget decisions. For example, if the constituents of a certain politician support defense spending, he might vote in favor of budget legislation that allocates more money to defense. If a politician's part is largely in favor of a certain budget decision, he might feel pressured to vote with them, even if he doesn't agree with the decision on a personal level.
- Unanticipated events can have a large impact on budget decisions. The emergence of a new expense, such as a traffic ticket, might force you to change how you allocate your income. At the government level, events like wars and natural disasters may prompt sudden changes in expenditure.
Changes in Income
Priorities
Political Pressure
Unexpected Events
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