What is a budget?

A budget serves as a financial plan that outlines expected revenues and expenditures over a specific period. It is a critical tool for both individuals and organizations to manage their finances effectively. By detailing anticipated income alongside projected expenses, a budget helps to ensure that spending does not exceed income, allowing for better financial health and planning.

Creating a budget allows individuals or organizations to set spending priorities, allocate resources more effectively, and make informed financial decisions. It acts as a roadmap for future financial activities, helping to identify areas where savings can be made or where additional income might be necessary. In essence, a budget is a proactive approach to managing finances, focusing on guidance and future planning rather than merely tracking past transactions or assessing current stability.