Budget
Definition
A budget is a financial plan that outlines expected income and expenses over a specified period. It helps individuals manage their finances by tracking their spending and saving goals.
5 Must Know Facts For Your Next Test
- A budget typically includes categories such as housing, food, transportation, and entertainment.
- Creating a budget involves estimating both fixed and variable expenses.
- Tracking actual expenses against the budget helps identify areas where adjustments may be needed.
- Emergency funds are an important component of a personal budget to cover unexpected expenses.
- Budgeting can help in achieving long-term financial goals like saving for education, retirement, or major purchases.
Review Questions
- What are the main components that should be included in a personal budget?
- Why is it important to track actual expenses against your budget?
- How does having an emergency fund benefit your overall budgeting strategy?
"Budget" appears in:
Subjects (2)
Related terms
Income: Money received, especially on a regular basis, for work or through investments.
Expenses: The costs required for something; the money spent on different categories.
Savings: The portion of income not spent on current expenditures and set aside for future use.
