Glossary
Budget
A planned allocation of income across spending and saving categories.
Definition
A budget is a planned allocation of income across spending and saving categories over a defined period — usually monthly. Budgets work by setting a cap per category (housing, food, transport, savings) and reviewing actual spending against the cap. The two most common methods are 50/30/20 (needs/wants/savings) and zero-based budgeting (every rupee assigned a job).
Key points
- 50/30/20 is a starter rule; zero-based budgeting is stricter and more powerful.
- A budget is only useful if you record actuals and compare them — without tracking, the cap is theoretical.
- Recurring bills (rent, EMIs, subscriptions) should be auto-categorised so the budget runs on autopilot.
- Most budgets fail because of irregular spending (gifts, repairs) — set a contingency line.
Related
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