Budgets are pretty simple when you get right down to it. A budget is a plan to bring in enough money (income) to cover the money going out (expenses). If you can’t manage to pay your bills with the money you have or earn, you are short cash (deficit) and in the short term might rely on credit (debt).

It’s the same for regular people, rich people, businesses small and large and even countries.

If your expenses are greater than your income, you will have to deal with it at some point either by:

Short term solutions like using credit when you won’t have the money to repay it soon are not a good plan.

Tips to setting up a good budget to follow in the next post.