Budgeting

Budget

A budget is the advance allocation of your income to spending and saving categories, with later tracking of the differences.

The value isn't in recording past spending, but in deciding ahead of time where each dollar goes and then comparing actual results with the plan.

Carrying balances between months prevents a seasonal category (insurance, holidays) from throwing off the monthly tracking.

Put it into practice

50/30/20 budget calculator

Related terms

50/30/20 rule — The 50/30/20 rule splits monthly take-home income into 50% for needs, 30% for wants, and 20% for savings and debt repayment.
Budget variance — Budget variance is the difference between the amount planned for a category and the income or expense actually recorded during the period.
Emergency fund — An emergency fund is a liquid cushion equal to three to six months of fixed expenses, set aside exclusively for unexpected events.

Bring it to your own numbers

netclariq applies these concepts to your real accounts, debts and investments, with simplified double-entry bookkeeping and without asking for your bank credentials.

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Educational content. netclariq does not provide financial, investment, tax or legal advice.