Financial Dictionary -> General Finance -> Budget

There are many types of budget, from your personal financial budget, to the government's spending budget, to the budget of a business. In essence a budget is simply the calculation and allocation of your available money so you are aware of how much you are spending, how much needs to be put aside for bills and costs and how much you have left to save or invest. Some people set a budget limit deliberately so they have money left over for savings. Large businesses give different departments a set budget that they can't go over because it may cause financial issues. The act of making a budget (or allocating money) is known as budgeting.

Budgets are usually set over a period of time. For example a school may get a yearly budget of $20,000 for new books and equipment. Or you may set yourself a budget of spending only $90 a week before the Christmas period so you have more to enjoy the holidays with. It is an ongoing process and adjustments are often made at the end of the given period or several times during that period.

There are several budget related terms that are more specific to businesses. One of those would be a budget deficit. This means that the set budget will actually be costing the business money. In other words they are spending more than they are making. However operating at a deficit is not always a bad thing as the company may have made huge profits the year prior or are reinvesting to expand and make the money back later. In general terms though, businesses aim to constantly make a profit and avoid a budget deficit.

Budgets are much more effective for those individuals or businesses that get a fixed income. For those that have a fluctuating income budgets are often calculated on a weekly or monthly basis.