What is the primary purpose of a budget?

The primary purpose of a budget is to plan and control financial resources to meet expenses and savings goals. A budget serves as a detailed plan that outlines expected income and expenses over a specific period, typically monthly or yearly. By creating a budget, individuals and households can prioritize spending, ensure that necessary expenses are covered, and allocate funds toward savings or debt repayment. This structured approach fosters financial discipline and helps avoid overspending, ultimately contributing to achieving both short-term and long-term financial objectives.

While accumulating wealth, monitoring investment performance, and tracking social expenses are important aspects of personal finance, they are not the core function of budgeting. Budgeting specifically focuses on managing day-to-day finances effectively, ensuring that all financial goals can be met consistently over time.