24 Hour Loans glossary of financial terms

Budgeting

If you draw up a budget then you will look to set out how you spend your income over a specific period of time so that you don?t spend more money than you have at your disposal. So, for example, your budgeting exercise may take the form of writing down your incoming money for the month (i.e. your salary) and then deducting your regular expenses from it such as your mortgage commitments and other bills. Once these commitments have been deducted then any remaining money will go towards helping you manage your daily life (i.e. paying for food, expenses and other costs) until your salary is next due. If you manage your budgeting well then you won?t spend more money in outgoings than you have coming in every month.

This kind of exercise is often used during the mortgage application process to work out how much you can afford to spend on your mortgage loan each month. You?ll also see more formal methods of budgeting in the business world. Companies can choose from various budgeting options to keep their businesses operating on track.