A budget is a spending plan based on income and expenses. In other words, it’s an estimate of how much money you’ll make and spend over a certain period of time, such as a month or year. (Or, if you're accounting for the incoming and outgoing money of everyone in your household, that's a family budget.)
Before you build a budget
NerdWallet breaks down your spending and shows you ways to save.
Budgeting can involve making a comprehensive list of expenditures or focusing on a few categories. Some people prefer to write their budget out by hand, while others use a spreadsheet or budgeting app. There’s no correct way to budget — what works for one person might not work for another.
That said, the 50/30/20 budget is one of our favorites. This method suggests you spend about 50% of your monthly after-tax income on necessities, 30% on wants and 20% on savings and paying off debt.
What’s the purpose of a budget?
Budgeting isn’t about depriving yourself; it’s about taking control of your money. Making a budget shouldn’t feel like a punishment. Remember, it’s a plan for all of your money — that includes money for fun stuff, too.
A budget doesn’t have to be rigid. In fact, it should change as your circ*mstances change — when you get a raise, for example, or become a homeowner. The idea is to make your budget as personalized as possible, leaving room to adapt. Surprises (and mistakes) will happen.
Budgeting benefits everyone, not just those who struggle financially. It encourages you put your money to work in the best way possible and can help you identify what's soaking up too much of your cash. Think of a budget as a steppingstone to your financial goals. It can help you:
Understand your relationship with money. Tracking your income and expenses paints a clear picture of how much you have to save or spend. Once you spot patterns, you can identify where to make adjustments. Maybe you spend less than you earn (way to go!) but you’re paying for some subscriptions or services you no longer need.
Save for the future. A good budget coaxes you to earmark money for an emergency fund and savings goals like a vacation or retirement. Here's how to work out how much you should save each month.
Get — or stay — out of debt. Mapping out expenses in advance reduces the risk of overspending and can help you pay off debt you already have.
Relieve stress. Budgeting isn’t a cure-all, but it can help you manage financial decisions and prepare for challenges.
How do you start a budget?
Ready to give budgeting a whirl? Start with the basics. That includes outlining your income, account balances and debts, and tracking expenses. Then, identify your priorities and find the right budget system for your needs.
A budget is a spending plan based on income and expenses. In other words, it's an estimate of how much money you'll make and spend over a certain period of time, such as a month or year.
a. : a statement of the financial position of an administration (as of a nation) for a definite period of time based on estimates of expenditures during the period and proposals for financing them. b. : a plan for the coordination of resources and expenditures. develop a budget for her company.
What is a budget? A budget is a plan you write down to decide how you will spend your money each month. A budget helps you make sure you will have enough money every month. Without a budget, you might run out of money before your next paycheck.
Budget. An approved plan to spend a certain amount of money in a given fiscal year or project period. The budget sets the spendable balance on centrally managed and sponsored funds.
A budget is a financial plan that estimates income and expenses for a specific period, usually a month or a year. It is a crucial tool for individuals, households, businesses, and governments to manage their finances, allocate resources, and achieve financial goals.
noun. ˈbə-jət. Definition of budget. as in fund. a sum of money set aside for a particular purpose we've spent a little more than our budget this year.
I also call budgeting self-care. Because it's deciding that your self cares about where your money goes! Every single dollar! I know this because I've lived it.
Funds received in the form of federal contracts and grants, private gifts and grants, special agreements with state and local agencies, and certain other minor income sources are considered non-budgeted (or extramural) funds.
At the most basic level, a budget is a way to keep track of the money you are getting and the money you are spending. A budget is a great way to make sure that you can cover your expenses from month to month.
A budget is a financial plan that outlines the expected income and expenses for a defined period. In business context, Budget can be a roadmap guiding resource allocation to achieve organizational goals and objectives efficiently.
A business budget is a spending plan for your business based on your income and expenses. It identifies your available capital, estimates your spending, and helps you predict revenue. A budget can help you plan your business activities and can act as a yardstick for setting up financial goals.
A financial budget offers a strategic overview of how a business manages cash flow, assets, expenses, and income. It establishes a comprehensive overview of revenue from core operations relative to spending via a comprehensive documentary picture of a company's financial health.
Budgeting for any age is about allocating money for your needs, wants and savings goals. Like grownups, kids need to decide how much money to save, how much to spend – and what to spend it on.
Try the 50/30/20 rule as a simple budgeting framework. Allow up to 50% of your income for needs, including debt minimums. Leave 30% of your income for wants. Commit 20% of your income to savings and debt repayment beyond minimums.
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