What is the purpose of a budget?


Quick Answer

The purpose of a budget is to ensure that a household's or business's expenses do not amount to more than the income. A budget can also help individuals properly allocate money to different categories to ensure that all of the basic needs of the family or company are met.

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What is the purpose of a budget?
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Full Answer

There are many different kinds of budgets, but one popular option is the zero-based budget. In these types of budgets, the income is divided into categories until there is nothing left unassigned. This is where the zero comes in. A budget only works, however, if it is adhered to, and if more is spent in a category than was allotted, the budget will be considered in the red.

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