Budget Definition
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What is Budgeting Anyway?

The simplest budget definition that I have seen is that a budget is a spending plan. The two terms, budget and spending plan, are really interchangeable. This spending plan incorporates all of your income and your every expenditure. A spending plan (budget) is written down so that you can refer back to it and review it from time to time. Your spending plan should be reviewed every time you get paid so that you can track how you are doing in relation to your plan. Making adjustments is easier in small increments rather than needing to go deeper in debt to meet an unexpected financial need.

What is budgeting?
Budgeting is the process of reviewing all of your income, and all of your financial obligations, like your mortgage or rent, as well as your discretionary spending and coming up with a written plan on how you will allocate your income. A spending plan enables you to tell your money where to go instead of wondering where it went.

What is a budget?
A budget is the written down spending plan that describes how you will allocate your income. A budget allows you to see at a glance exactly where you stand financially and a spending plan allows you to make intelligent, informed spending decisions.

You might think that I am making a big deal about sitting down and making a written spending plan. I have talked to many people who say they have a very good idea about how much money is coming in and where their money is all going. Perhaps you are one of them. However, the thing that is missing is the clarity that comes from a written plan. When you have a plan down in black and white and you can see exactly where your money is going you have the ability to maximize your charitable giving, savings and investing. You also have something to refer back to and don't run the risk of forgetting something important.