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Definition of 'Budgeting'

Budgeting is the process of creating a plan to allocate financial resources, such as income or savings, in order to achieve specific financial goals. Budgeting typically involves creating a detailed list of expected income and expenses over a specific period of time, such as a month or a year, and tracking actual income and expenses against this plan.

The purpose of budgeting is to provide a framework for making informed decisions about spending and saving, with the goal of achieving financial stability and meeting both short- and long-term financial goals. By tracking income and expenses, budgeting can help individuals or households identify areas where they may be overspending or where they can reduce expenses, as well as opportunities to save more money or invest for the future.

Budgeting can take many forms, from simple pen-and-paper plans to more complex software or apps that automate tracking and analysis of income and expenses. The key to successful budgeting is setting realistic goals, regularly tracking income and expenses, and making adjustments as needed to stay on track with financial goals.

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