There are someconditions that are related to forecasting that needs to be understood.1. This involves predicting the future situation that is expected to arise. This requires theindividual or the household to look at how various events will play out because the finalforecast will be based on the conditions prevalent at that point of time.2. There has to be a specific basis on which forecasting is done. This means that it is not justa random exercise but there is a basis for which the predictions are made. Arriving at the basisfor forecasting thus becomes a key aspect.3. The various evolving conditions are taken into consideration when the forecasting is made.This makes forecasting a dynamic exercise.4. There are several assumptions that are made when the forecasting is undertaken so theseassumptions need to be looked at closely. Assumptions can also change along with the changein the overall conditions.505. There might be a need for several experts or expert opinion in the way in which things areconsidered, so this assumes an important role in the overall plan. This is needed as one personmight not know about all the areas and factors that impact decision making.6. There has to be some experience present for the person making the forecasts. Hence, themore one does it, the better it gets because there is a proper idea of how things will work outunder different circumstances.Forecasting is an exercise and this can be used to move ahead with budgeting as it can be thebasis for the budget that is prepared. The forecast also has to be seen in the context of whatactually happens so that the real situation is understood and deviations if any are plugged.