Section 6 – How to build a budget
Target audience : Management committee
What is a budget?
A plan to show how much money an organisation is expecting to receive and how much they will need or be able to spend in a given period e.g. a financial year.
What is its purpose?
The purpose of a budget is to be able to plan the activities of the organisation for the year ahead, co-ordinate these plans through the periods of the budget and control the different aspects of the budget, for example how much is being spent on equipment.
Management committees should use this document as a starting point when framing or reviewing the budget for their organization.
A budget is split into receipts (income) and payments (expenditure). Below is a detailed list of the different categories in each section. This is only a guide and not exhaustive.
|Fee income||The amount of income that is expected to be received from places sold|
NEG (nursery education grant)
|The amount of income that is expected to be received from South Gloucestershire Council in respect of Nursery Education Grant funded for 2, 3 and 4 year olds.|
|The amount of money the setting hopes to raise through fundraising activities|
The amount of bank interest that is expected to be earned.
|Grants||Any grants that the setting expects to receive in the financial year, e.g. Capital Conversion grant.|
|Any other income that the setting is expecting to receive, e.g. if meals are charged separately|
|Salaries||The gross cost to the setting of employing all its staff.|
|NI employers contribution||The amount of National Insurance that the setting has to pay to the Inland Revenue.|
|Pension contribution||The amount that the setting pay towards staff pensions|
An amount set aside as an emergency and to cover redundancy payments.
|Redundancy||An amount set aside based on the statutory amount payable to each member of staff and reviewed annually.|
|Rent/lease||The cost of rent/lease payable.|
|Heat/light/power||The cost of domestic fuel that the setting will consume.|
|Water/rates/refuse||The amount payable.|
|Repairs and maintenance||An amount set aside for general repairs and maintenance to the premises.|
|Cleaning materials / uniforms||An amount set aside for the staff uniforms and cleaning materials.|
|Play equipment over £500||Purchase of single items of equipment costing over £500|
|Play equipment under £500||Purchase of single items costing under £500|
|Consumables||Materials for the Setting that will be used, for example, paper, pens etc.|
|Food||The cost of food purchased.|
|Baby essentials||The cost of specific baby products e.g. nappies|
|Consumables (office)||The amount spent on office consumables e.g. ink cartridges|
|Telephone||The amount payable for a telephone line, internet line and call charges in the financial year.|
|Postage||The amount of postage used in the financial year e.g. letters sent to parents and for payment of invoices times first class postage rate.|
|Membership fees||The amount of subscriptions payable to membership bodies.|
|Insurance||The amount of insurance premium payable e.g. public liability Insurance|
|Recruitment costs||The cost of recruiting new members of staff e.g. advertising|
|Training and development||The cost of staff training.|
|Advertising / Publicity||The cost of advertising the setting e.g. a newspaper advert.|
|Payroll||The amount paid to the company that produces the payroll for the setting.|
|Registration fee||The amount of registration fees payable e.g. Ofsted|
|Audit fee||The amount payable for an accountant to audit the accounts of the setting.|
|Bank charges||The annual cost of account running fees payable to the bank.|
|Other payments||Any other payments due in the financial year.|