A budget is simply a plan for your money
Budgeting is a cycle:
- step 1 – prepare: estimate your expected money coming in, money going out and money set aside for later use as accurately as you can;
- step 2 – create: ensure your money coming in equals your money going out and money set aside for later use– this is your budget;
- step 3 – implement: put the budget in place and refer to it when making decisions;
- step 4 – review: on a regular basis compare what actually happened against your estimated budget and use this information to adjust for your next budgeting period.