Willow's annual budget is in disarray because of unexpected variances, some of which are not in her control. She was not expecting a 10% rent increase, which increased her expenditures, nor a 15% increase in contributions to her employer's health insurance plan, which reduced her income. In addition, her savings lost future value when her bank reduced its interest rate by 2.5%. At the same time, she spent more on clothing, entertainment, and gifts than she realized more than she had budgeted for. Willow is discouraged. What should she do?

What are the causes of budget variances?

When is a cash flow budget a useful alternative to a comprehensive budget?