A budget is a financial document used to project future income and expenses to determine if a person or company can continue operating at projected levels. It allows you to understand where your money goes, make spending decisions, reach financial goals, and eliminate surprises. Creating an effective budget requires identifying monthly income and expenses, setting short- and long-term goals, and tracking your progress toward those goals. Budgeting, saving consistently, and paying yourself first are important tools for building financial security and reaching your financial objectives.