Budget Definition: A Plan for Every Rupee and Dollar

The full budget definition, sense by sense

1. A financial plan (noun). An estimate of income and spending for a set time. Our household budget covers rent, food, travel and savings.
2. The money available (noun). The project has a budget of two lakh rupees. You can go over budget or stay within budget.
3. A government's yearly plan (noun). The official statement of how a government will raise and spend money in the coming financial year.
4. To plan spending (verb). She budgets carefully every month. You budget for an expense, and you can budget time as well as money.
5. Cheap or low cost (adjective). A budget airline, budget travel, a budget phone.

To define budget in a word: plan. However the budget meaning shifts, the core meaning of budget is deciding ahead of time what money will do.

A worked example of a monthly budget

Imagine a young professional who takes home 40,000 a month (rupees, dollars or any currency works the same way). A simple budget might look like this:

Comparing planned with actual is the useful part. Here food and fun ran over, which ate into savings. Next month, the person might cut takeaway meals or set a firmer limit. A common rule of thumb, the 50/30/20 approach, suggests about half for needs, 30 percent for wants and 20 percent for savings, but real budgets vary a lot with income and costs. Rising prices from inflation often force people to revise their plans.

Budget in sentences

• We set a budget of 300 dollars for the class trip and stayed just under it.
• The film went far over budget after the shoot moved abroad.
• I budget an hour every Sunday for planning meals and checking my bank account.
• Students on a tight budget often share flats and cook at home.
• The council's budget includes new streetlights and repairs to the market roof.

How national budgets work: India, Britain, America

A national budget sets out expected tax and other revenue alongside planned spending on things like defence, health, schools and roads. If spending is higher than income, the gap is a deficit; if lower, a surplus.

• India: the Union Budget is presented in Parliament by the Finance Minister, usually on 1 February, for the financial year that begins on 1 April. States present their own budgets too.
• United Kingdom: the Chancellor of the Exchequer delivers the budget statement to Parliament.
• United States: the President sends a budget proposal, but Congress decides spending through appropriations bills. The federal fiscal year begins on 1 October.

Related money terms such as revenue and debit each have a page of their own.

From a leather pouch to a nation's accounts

The word began as a bag. In the early fifteenth century, an English budget was a leather pouch or wallet, from Middle French bougette, a little bag, a diminutive of bouge. That came from Latin bulga, a leather sack, a word the Romans took from Gaulish.

In eighteenth century Britain, critics mocked a leading minister by picturing him as a quack doctor "opening the budget", his bag of tricks. The phrase stuck to the yearly presentation of national finances, and by the late 1700s it was the standard term. In time the bag disappeared from the meaning, leaving only the plan of money inside it.

Budget words that often get mixed up

Budget vs estimate: an estimate is a forecast of what something will cost; a budget is a decision about what you will allow. Budget vs allowance: an allowance is a fixed sum given to someone, like pocket money or a per diem; a budget can include many allowances. Budgetary is the formal adjective (budgetary limits), while budget as an adjective means cheap.

Being careful with money is frugal; a budget is the tool frugal people tend to use. For more terms about money and work, browse our business and money hub, which groups them by topic.