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.)
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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. This can make it easier to achieve short-, mid- or long-term goals.
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. Budgets can be reviewed and updated periodically. Some people choose to do this monthly, bi-monthly or twice a year, depending on life changes that occur. 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. Some common budgeting systems include the 50/30/20 budget, the envelope system, the zero-based budgeting system and pay-yourself-first budgeting. Stick to the budget that best suits your personality, lifestyle and finances.
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. A budget shows you: how much money you make.
A plan of financial operation embodying an estimate of proposed expenditures for a given period of time or purpose and the proposed means of financing them.
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals. Let's take a closer look at each category.
Budgeting is simply the act of working out how much money you've got coming in (income) and then as accurately as possible figuring out how much you have to pay out (expenditure) on fixed costs such as rent, bills and so on to then come up with how much you've got left to spend on everything else (disposable income).
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.
A budget is simply a spending plan that takes into account estimated current and future income and expenses for a specified future time period, usually a year. Having a budget keeps your spending in check and makes sure that your savings are on track for the future.
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.
The budget can be defined as a „financial plan that includes calculating the revenues and. expenses of the state, a social or economic organization for a determined period of time”
Short-term budgeting is the process of estimating your income and expenses for a specific period, such as a month, a quarter, or a year. It is essential for managing day-to-day operations, such as paying bills and ordering supplies, as well as monitoring performance and adjusting plans.
The word “budget” has a charming origin. It comes from the French word “bougette,” meaning “small leather bag.” It was sort of a 15th-century French fanny pack. In English “budget” first meant “pouch, wallet, bag.” However, these were not necessarily used to carry money.
The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).
A budget is a plan that helps you manage your money. It shows you how much money you have, how much money you need to spend on different things, and how much money you can save or use for other goals.
making $4,000 a month using the 75 10 15 method. 75% goes towards your needs, so use $3,000 towards housing bills, transport, and groceries. 10% goes towards want. So $400 to spend on dining out, entertainment, and hobbies.
Budgeting is the process of putting a plan together to help you not only save money, but also know how to spend it. A budget can ensure you're not overspending and you can cover necessary expenses. It's often done monthly and you can re-evaluate it periodically.
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