Budgeting is all about predictability and risk aversion; it just happens to involve money. If this premise is correct, the "lose or use it" makes a lot of sense. For example, a savvy manager will want to have money available for emergencies available in the budget (risk aversion). And one gets money by using it. If that money is not utilized within the budget year, then the manager risks looking disorganized (unpredictable).

I think whether or not the above is financially responsible is different good point. 😉