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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
A plan for where your money goes each month — what comes in, what must go out, and what is left over.
Why It Matters
A budget is what reveals whether there is anything to invest in the first place. Every downstream decision — building an emergency fund, paying down a balance, contributing monthly — assumes a surplus, and the budget is what finds it. It also produces the number an emergency fund is sized against: essential monthly expenses, which is a smaller figure than total spending.
Key Points
- Separates income from fixed, variable and discretionary spending.
- The gap between income and spending is what can go toward saving or investing.
- Your essential-expenses figure is what emergency funds are sized against.
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Common Questions
A plan for where your money goes each month — what comes in, what must go out, and what is left over. A budget is what reveals whether there is anything to invest in the first place. Every downstream decision — building an emergency fund, paying down a balance, contributing monthly — assumes a surplus, and the budget is what finds it.
A budget is what reveals whether there is anything to invest in the first place. Every downstream decision — building an emergency fund, paying down a balance, contributing monthly — assumes a surplus, and the budget is what finds it. It also produces the number an emergency fund is sized against: essential monthly expenses, which is a smaller figure than total spending.
Separates income from fixed, variable and discretionary spending.
The gap between income and spending is what can go toward saving or investing.
Your essential-expenses figure is what emergency funds are sized against.