How is a budget defined?

A budget is defined as an estimate of income and expenditure for a set period of time. This definition emphasizes the planning aspect of budgeting, where individuals or organizations project their expected revenues and expenditures to manage their financial resources effectively. By estimating income, a budget helps in understanding how much money will be available for various expenses. It also involves detailing expected expenditures, enabling individuals and organizations to allocate their funds strategically to meet their needs and objectives over a specific timeframe, such as monthly or annually.

While saving money, financial reports, and records of business assets are related concepts in personal and business finance, they do not capture the comprehensive nature of a budget, which serves as a proactive planning tool rather than just a retrospective or narrower financial document. A budget is vital for ensuring fiscal responsibility, preparing for future needs, and setting financial goals.