Incremental budgeting

Incremental budgeting is a method where a business adjusts its current year's budget to create the next year's budget, mainly by adding or subtracting a small percentage or amount based on past expenses and revenues. It assumes that previous spending levels are a reasonable starting point and makes adjustments for inflation, new projects, or changing priorities. This approach is straightforward, saves time, and provides stability, but it may also perpetuate inefficiencies if past expenses were unnecessary. Overall, it relies on past budgets as a baseline for future planning.