Glossary - Budgeting

Balanced budget Income equals expenses.

Budget An itemized summary of probable income and expenses for a given period. A plan for spending and saving money.

Budget shortage Expenses are greater then income. Also called a deficit.

Budget surplus Income is greater than expenses.

Discretionary expenses Determined by personal needs and wants and may be controlled. Examples: clothing, entertainment.

Discretionary income The amount of income available for spending after all fixed and necessary expenses have been paid.

Emergency fund Money set aside to allow you to weather any unexpected events or expenses in your life. Often used to pay for expenses not incorporated into the budget such as property losses, medical expenses not covered by insurance, unemployment.

Expense An individual’s cost or obligation to meet a need or pay a debt.

Fixed expenses Occur regularly and do not vary in amount. Examples: rent, car payments.

Goods Items of value that are tangible (capable of being seen or touched).

Gross income Total personal income before taxes or other deductions.

Income Earnings.

Inflation The general increase in the cost of goods and services. Often measured by the consumer price index (CPI).

Net income For an individual, gross income minus expenses.

Opportunity costs Cost of goods and services that must be given up in order to obtain other goods and services.

Purchasing power The value of money measured in terms of what one can buy with it.

Savings Unspent income.

Services Work that has value, such as the work of lawyers, doctors, actors, electricians, plumbers, etc.

Variable expenses May occur regularly, but they vary from one time to another. Examples: utilities, groceries, telephone.