Budgeting Glossary

Budget:

1.     DECISION MAKING PROCESS.

2.     A method to reduce financial stress.

3.     A short term plan on how you will spent your money over the next year with some long term considerations, like, college, buying a house, retirement.

Category:

1.     The term used for identifying each part of a budget.

2.     Similar to a cost code in a business.

Cash Flow: Money you expect to receive on a recurring basis, ie, salary, and is basis for your budget.

Irregular Income:

1.     Some jobs do not provide a consistent income, ie, commissions, piece work, trucker’s mileage. For this type of income money must be set aside when the income is higher than average. When the income is less than average, the set-aside funds are used to bring up the lower income to the expected level. The expected level is your budget-basis.

2.     Money you may receive periodically, ie, overtime, but it cannot be part of your financial basis for you budget. However it should be handle responsibility.

Bulk money: Money you might receive infrequently, ie, income tax refund. This money can be used for one time purchases that your cash flow cannot afford. OR it can be set aside for future needs.