What defines a budget?

A budget is fundamentally defined as a financial plan that outlines income and expenses. This definition encompasses the core purpose of a budget, which is to provide a structured approach for managing one's finances over a specific period, such as monthly or annually.

By detailing expected income sources (such as salaries, bonuses, or investment returns) alongside projected expenses (including fixed costs like rent or mortgage payments, variable costs like groceries, and discretionary spending), a budget assists individuals or organizations in ensuring that they can meet their financial obligations and make informed decisions about their spending and saving.

While other choices include relevant financial concepts, they do not capture the essence of a budget as effectively. For instance, a plan for savings and investments focuses more on future financial growth rather than current income and outflow management. A record of past financial transactions is more about bookkeeping than planning, and a summary of financial goals and objectives emphasizes aspirations rather than the systematic tracking of financial activities. Therefore, the description of a budget as a financial plan outlining income and expenses is the most accurate and comprehensive definition.