What are traditional budgetary approaches based on?

Traditional budgetary approaches are grounded in historical spending patterns and incremental changes. This methodology relies heavily on past data to formulate budget plans for the future. By analyzing the expenses from previous periods, organizations can identify trends and make informed decisions based on what has been spent in the past. Incremental adjustments may then be made to accommodate for inflation, changes in the cost of goods and services, or shifts in organizational priorities.

This approach contrasts with future projections which might introduce uncertainty as they depend on assumptions that may not hold, as well as market trends or innovations that are forward-looking and lack a historical context. Random spending habits do not provide a systematic framework for budgeting, as they lack a basis for rationale decision-making. In summary, using historical patterns allows for a more stable and predictable budgeting process, which is why traditional approaches focus on this method.