Proper budgeting: Key to sustainability

To sustain its continuity and assure its long-term survival, an organization must take actions and adopt practices consistent with good governance.

- By PINKY CONCHA-COLMENARES

Prudent financial management is vital. Do not spend money which you do not have. Match your expenses with your income by following a budget. Set aside money for food, electricity, rent, transportation and other essential expenses.

Use your credit card judiciously. Do not borrow beyond your means. If you are reckless, you will incur high interest costs; if unable to pay fully, you will be slapped with penalties. You may even end up being sued in court.

What is true for people applies to big organizations. Sales revenues are earmarked for production costs such as building maintenance, materials and employees' payroll.

Only after settling its obligations can a corporation consider giving out surplus earnings as dividends to stockholders, or bonuses to employees.