A budget is a financial plan which includes your income and expenditure. This could be for a long period or a short period.
Investopedia defines budget as an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis.
Cambridge dictionary defines a budget as a plan to show how much money a person or organization will earn and how much they will need or be able to spend.
Hence, in my own understanding, a budget is a financial plan created for future use to help manage income and expenditure. Therefore, to succeed at it, it has to be made ahead of time.
The act of making a budget
The act of making or creating or writing a budget can be referred to as budgeting. Hence, budgeting is simply the act of drafting out a plan for financial expenditures.
To be able to manage your income and finances properly a budget must be taken seriously. It is easy to draft out since it’s just a simple one for your income.
The importance of Budgeting
It helps you track your expenditures.
It helps you plan your life financially.
It is a major principle of managing your finances.
It helps you save money.
It teaches you how to spend money wisely.
Now that you know what a budget means and the importance of creating one and more. You should take it seriously as it has a big role in your financial stability. When you spend your income without planning, you spend blindly. It is a bad spending habit you should avoid.
Budgeting is a futuristic plan and it is simple to draft out. You are not doing something standard for a company. Just a simple draft for your income. Therefore, start budgeting your expenditures.