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Budget
Definition
A budget is a plan for how to spend your money, balancing income and expenses to achieve financial goals.
Explanation
A budget tracks income and expenses to ensure you spend less than you earn. Common budgeting methods include the 50/30/20 rule, zero-based budgeting, and envelope system. Budgeting helps control spending, increase savings, and reach financial goals.
Creating a budget is the foundation of good financial management. Review and adjust your budget regularly to reflect changes in income, expenses, and goals.
Example
Using the 50/30/20 budget, someone earning $4,000 monthly would spend $2,000 on needs, $1,200 on wants, and save $800.