What Is A Budget Anyway?

That may seem like an obvious question, but it dawned on me the other day that I didn’t know the answer.

Now, I do very well at managing the money I have. But… I’ve never heard the actual definition of a budget. (All I’d known was that our national budget is in the red, that “budgeting” is often looked upon as a dirty word, and that the “budget” part of “budget accommodations” usually translates as “cheap and in a dangerous neighborhood”.)

But according to dictionary.com, one definition of a budget is:
An itemized summary of estimated or intended expenditures for a given period along with proposals for financing them.

Huh. Turns out that “budget” doesn’t deserve its bad rap. It’s just a plan: a written listing of all that stuff I’d made mental notes about in my head. You know, like “the house payment is due on the first, so we need to keep at least $1000 in the account for that in addition to the other bills we need to pay”. Except in the written list, it would be something like this:

House payment $1000 Due on the 1st
Bill #2 $550 Due on the 4th
Bill #3 $150 Due on the 15th

etc.

(and of course, the list would include all other monthly fixed expenses, as well as common non-fixed expenses such as amounts for groceries, entertainment, etc. It would also include annual expenses such as car insurance and taxes, and would set aside amounts for savings and investments.)

So the next time you hear “budget”, try mentally substituting the word “plan” instead and see how you feel about that.