Legal Definitions - budget

A budget is a financial plan that outlines expected income and anticipated expenditures over a specific period, often a year. It can also refer to a particular amount of money set aside for a specific goal or project. Essentially, a budget serves as a roadmap for managing financial resources by forecasting what money will come in and how it will be spent.

• Example 1: Annual Operating Plan for a Non-Profit Organization

  A local animal shelter prepares a document detailing all the donations, grants, and adoption fees it expects to receive over the next twelve months. Simultaneously, it estimates all the money it will need to spend on veterinary care, food, facility maintenance, and staff salaries for the same period. This comprehensive document guides their financial decisions for the year.

  This illustrates a budget as a statement of an organization's estimated revenues (donations, grants, fees) and expenses (vet care, food, salaries) for a specified period (one year), allowing the shelter to plan and manage its operations effectively.

• Example 2: Construction Project Funding

  A real estate developer sets aside $2 million specifically for the construction of a new apartment complex. This sum is intended to cover all costs associated with the project, including materials, labor, permits, and unforeseen contingencies, and cannot be easily diverted to other company projects.

  Here, the budget refers to a specific sum of money ($2 million) that has been allocated to a particular purpose or project (the construction of the apartment complex). It defines the financial limit for that specific endeavor.

• Example 3: Household Financial Planning

  A family creates a monthly plan that tracks their expected income from salaries and investments, alongside their anticipated spending on housing, groceries, transportation, utilities, and entertainment. They review this plan regularly to ensure they are living within their means and saving for future goals.

  This demonstrates a budget as a statement of estimated revenues (salaries, investments) and expenses (housing, groceries, etc.) for a specified period (one month) for a household. It acts as a financial guide to manage their personal finances.