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Budget Definition & Meaning

what is the definition of a budget

The process begins by establishing assumptions for the upcoming budget period. These assumptions are related to projected sales trends, cost trends, and the overall economic outlook of the market, industry, orsector.

  • It is better to have no debt before you begin investing.
  • These apps take the load off by syncing to your financial accounts and automatically importing and categorizing transactions for you.
  • Once you spot patterns, you can identify where to make adjustments.
  • An itemized summary of intended expenditure; usually coupled with expected revenue.
  • Cassidy Horton has researched and written hundreds of articles on banking, budgeting, loans, and more.

It’s easier to accumulate this financial cushion if you know the amount you’re bringing in and spending each month, which can be monitored with a budget. A budget, also known as cash flow, is arguably more important than the actual cash that you budgeting report have in your bank and investment accounts. Your cash flow is what allows you to pay for everything . The sales budget is often the first to be developed, as subsequent expense budgets cannot be established without knowing future cash flows.

In other projects

It should also include things like groceries, entertainment, gas, or surprise expenses. Give every dollar a job, based on your goals and what you discovered when you tracked your spending. A budget contains all sources of income and expenditures, both fixed and variable, for a given period of time. Long-term budgets cover time periods of one-year or more and are usually are quite general.

what is the definition of a budget

Terry, “A budget is an estimate of future needs arranged according to an orderly basis, covering some or all of the activities of an enterprise for a definite period of time”. Cassidy Horton has researched and written hundreds of articles on banking, budgeting, loans, and more. She has been published on well-known personal finance sites including Clever Girl Finance,, Money Under 30, and more. Cassidy has been quoted as a financial expert by MSN, LegalZoom, and Consolidated Credit.

British Dictionary definitions for budget (1 of

These are expenses you must pay each month, such as rent, insurance premiums, taxes, childcare, or your cell phone bill. Personal budgets are extremely useful in managing an individual’s or family’s finances over both the short and long term horizon. We believe everyone should be able to make financial decisions with confidence. The cost or estimated cost of living, operating, etc.

The production budget also estimates the various costs involved with manufacturing those units, including labour and material. In general, traditional budgeting starts with tracking expenses, eliminating debt, and once the budget is balanced, building an emergency fund. But to speed up the process, you could start by building a partial emergency fund. This emergency fund acts as a buffer as the rest of the budget is put in place and should replace the use of credit cards for emergency situations. The savings you put into these assets can still be accessed if you face an emergency, but you won’t be penalized for it. A budget is an estimation of revenue and expenses over a specified future period of time and is utilized by governments, businesses, and individuals.

How To Create a Budget

The project, which is budgeted at $200,000, will be completed in eight months. Mortgage advisers urge anyone on a tight budget to choose a fixed rate so they know they can afford the repayments. People on limited budgets should avoid travelling during the holiday season if they can. The project went over budget because of a miscalculation at the planning stage. The point of the budget is to keep you out of overwhelming debt and help you build a financial future that will give you more freedom, not less. So think about how you want your future to be and remember that keeping to your budget will help you get there. Adding to your debt load, on the other hand, will mean that your future could be even tighter.

what is the definition of a budget

A budget is a sum of money set aside and divided up to cover particular expenses. Like allotting certain amounts for food, rent, movies, and manicures every month to make sure you don’t run out of cash.

From the Middle French bougette, the noun budget translated to “leather pouch” when it was first used in the early 15th century. It wasn’t until 1733 that the word took on the more specific financial meaning it has nowadays. You can budget all sorts of things, including time, money, and energy. Every year, Congress tries to balance the federal budget — but that’s no easy task. An estimate of income and spending for some period of time. Budgeting is essentially a managerial process concerned with planning, co-ordination and control.

  • Local agencies were forced to cut their budgets by 50%.
  • More examples The school budget is going to be cut again this year.
  • Often the husband and wife contribute equally to the family budget.
  • More people are using home computers to help them plan and budget efficiently.

The Consumer Financial Protection Bureau offers a simple but effective template. You cut $50 from your takeout food budget, another $50 from subscriptions, $40 from entertainment, and you cut your clothing budget in half to free up another $110. The governor will discuss the state’s budget deficit/surplus. Fixed costs or the costs that are related to operations, such as real estate costs.

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