What is a budget?

A budget is fundamentally a financial plan that outlines expected income and expenses for a specific period, typically a month or a year. It serves as a roadmap for individuals or families to manage their finances effectively by anticipating their income sources, such as salaries or investments, and forecasting their expenses, which can include fixed costs like rent and variable costs like groceries.

Creating a budget helps establish financial goals, prioritize spending, and ensures that expenditures do not exceed income. It is an essential tool for achieving savings objectives and managing debt. By forecasting what one expects to earn and spend, it provides clarity and direction in financial decision-making, allowing individuals to make informed choices about their money management.