Question

What is the correct definition of a budget?

Option 1: A document that includes all an individual's different sources of income
Option 2: A financial plan that shows what a person plans to do with their money
Option 3: A list of income sources, assets, and expenses from the past year
Option 4: A list of an individual's short and long-term financial goals for twelve months

Answer 1

The definition of a budget is a financial plan showing what a person plans to do with their money, including both income and expenses.

Step-by-step explanation:

The correct definition of a budget is a financial plan that illustrates both income and expenses and lays out plans for how money will be used or saved. Therefore, the best option to describe a budget is Option 2: A financial plan that shows what a person plans to do with their money. A budget helps individuals make informed decisions about their spending and saving and can be essential for achieving financial goals. A budget can be simple, containing just basic income and expense categories, or it can be more elaborate, detailing various sources of income and planned expenditures. Governments, corporations, and individuals use budgets to plan for expected income and how funds will be allocated among consumption, savings, and other expenses.