What Is a Budget Plan?

Budgets show you where you are spending too much money.
Budgets show you where you are spending too much money. (Image: Image by Flickr.com, courtesy of Balazs Gal)

A monthly budget plan is the overview of what funds come into your account and then what funds exit the account. Balancing your budget helps to lower and eliminate debt.


Budgets help people track and manage their money by showing outflow and inflow. Budgets can show where you are spending too much money and areas where you can make cutbacks.


A budget can be as simple as writing all expenses and income on a sheet of paper or as complicated as a spreadsheet with charts and graphs. The complexity is not important, as long as the budget serves your particular needs.

Time Frame

A budget can go as far as a year in advance in an attempt to plan for future expenses, reduce debt or control expenses. Most budgets, however, are created on a month-to-month basis to help people manage outflow and inflow.


Break down each expense into categories, such as dining, entertainment, clothing, groceries, insurance and auto expenses. Categorize each form of income as well.


A monthly budget should be analyzed and areas of reduction should be considered in an effort to pay down additional debt or increase savings. Additionally, note any significant changes from month to month to see if there are any new areas of spending.

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