A budget is a financial plan that outlines expected income and expenditures over a specific period, such as a month, quarter, or year. It serves as a roadmap for managing resources, guiding decision-making, and achieving financial goals. Budgets are used by individuals, businesses, and governments to control spending, allocate funds, and monitor financial performance.

In a business context, a budget helps forecast revenues, estimate operating and capital expenses, and plan for future investments. It typically includes categories such as sales projections, cost of goods sold, operating expenses, marketing costs, employee salaries, and capital expenditures. A well-prepared budget enables companies to set financial targets, anticipate cash flow needs, and identify potential financial challenges before they arise.

There are various types of budgets, including:

• Operating budget – for day-to-day business activities.

• Capital budget – for long-term investment in assets.

• Cash flow budget – for tracking cash inflows and outflows.

Budgets can be static (fixed) or flexible, adjusting to actual performance. Regularly comparing actual results to the budget helps organizations assess their financial health and make informed adjustments.

In summary, a budget is an essential tool for planning, controlling, and evaluating financial activities, supporting responsible financial management and strategic growth.