This study examined the impact of budgeting practices on the financial performance of small and medium enterprises (SMEs) in Kikuubo, Kampala's busiest commercial hub. Budgeting is a central instrument of financial planning and control through which enterprises allocate resources, monitor performance, and pursue profitability, yet many SMEs operate with informal or weak budgeting. The study investigated how budget planning, budgetary control, budget participation, and budget monitoring relate to financial performance. A cross-sectional survey design with a mixed- methods approach was adopted, and data were collected from 175 respondents comprising SME owners, managers, and finance staff using structured questionnaires and interviews. Descriptive statistics, Pearson correlation, and structural (path) analysis were used. The results revealed a strong positive and significant relationship between budgeting practices and financial performance (r = 0.68, p < 0.01), with the practices jointly explaining 66.0% of the variance in financial performance (R² = 0.660). Budgetary control (β = 0.33) and budget planning (β = 0.30) emerged as the strongest path predictors. The study concludes that sound budgeting practices significantly enhance SME financial performance and recommends strengthening budgetary control, budget planning, and participation.