Part A: The Basics of Budgeting. What is a Budget? A budget is a plan for money - an estimate of expected revenues and expenses for a specific period.

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Presentation transcript:

Part A: The Basics of Budgeting

What is a Budget? A budget is a plan for money - an estimate of expected revenues and expenses for a specific period. Helps to determine if you can save or need to borrow money, or whether you need to consider certain decisions to meet your priorities.

What makes up a budget? Income/Revenue: ‘money in’, incoming money, money received Expenses/Expenditures: ‘money out’, outflow of money, cost, payment for goods and services

What is a balanced budget? A balanced budget is when your revenue and expenses match exactly. Revenues – Expenses = $0

What are other possible outcomes? Surplus: excess, when revenues exceed expenses, positive balance (+) Deficit: deficiency, when expenses exceed revenues, negative balance (-)

What is a debt? When your expenses exceed your revenues (deficit), you will have a shortfall. Therefore you will need to borrow money. The amount owing on borrowings is called a debt.

Discussion Can you think of examples where it makes sense to take on a debt?

Debrief What would happen if people, businesses or the government failed to budget their finances?

Discussion The budgeting process is an integral part of financial management for individuals, businesses, organizations and governments. This fiscal plan allows for the development of strategies for saving, borrowing and spending.