Reviewed by Feb 19, 2021| Updated on
Budgeting is the process of estimating the revenue and expenses over a specified future period of time. It is usually compiled and revisited to update on a periodic basis. Budgeting can be done for a person, a family, a group of people, a business, a government, a country, a multinational organization or any other entity that earns and spends money.
Savings are what a person has left over when the total expenditure is subtracted from the amount of disposable income earned in a given period of time.
In another perspective, a budget is a microeconomic concept that shows the trade made when one good is exchanged for another. Based on the end result of this trade, a balanced budget denotes that revenues are expected to be equal to expenses, a surplus budget denotes that profits are anticipated, and a deficit budget denotes that expenses will exceed revenues.
When it comes to savings, the amount of money left over after personal expenses have been met can be positive for those who are financially prudent.
A budget is basically a financial plan for a defined period, usually a year. It greatly enhances the success of any undertaking. Budgeting helps saving funds easier as it tells you how much money must be set aside for each category of expenses and the remaining can be put into the savings bucket.
Corporate budgets are essential for operating at peak efficiency. Apart from earmarking resources, a budget can also lay down the framework for setting goals, measuring outcomes, and planning for contingencies. Personal budgets are extremely important in managing an individual's or family's finances over both the short and long term spaces.