This study investigated the impact of budgeting practices on the financial performance of small and medium enterprises (SMEs) in Kikuubo, Kampala, Uganda. Using a quantitative descriptive correlational design, data were collected from 115 SME owners and managers through structured questionnaires. Budgeting practices were operationalised through budget preparation process, budget implementation, budget monitoring and control, and budget flexibility. Financial performance was measured through profitability, liquidity management, and revenue growth. Results revealed positive and significant correlations between all budgeting dimensions and financial performance (r ranging from .578 to .671, p < .001). Multiple regression analysis showed that budgeting practices collectively explain 64.5% of the variance in SME financial performance (R² = .645, F(4,110) = 50.11, p < .001). Budget preparation process was the strongest predictor (β = .338, p < .001). The study concludes that robust budgeting practices significantly enhance SME financial performance and recommends that SMEs adopt formal budgeting systems, leverage digital budgeting tools, and engage financial advisory services.