Balanced Budget

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DEFINITION of 'Balanced Budget'

A situation in financial planning or the budgeting process where total revenues are equal to or greater than total expenses. A budget can be considered balanced in hindsight, after a full year's worth of revenues and expenses have been incurred and recorded; a company's operating budget for an upcoming year can also be called balanced based on predictions or estimates.

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BREAKING DOWN 'Balanced Budget'

The phrase "balanced budget" is commonly used in reference to official government budgets. For example, governments may issue a press release stating that they have a balanced budget for the upcoming fiscal year, or politicians may campaign on a promise to balance the budget once in office.

It is important to understand that the phrase "balanced budget" can refer to either a situation where revenues equal expenses or where revenues exceed expenses, but not where expenses exceed revenues.

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RELATED FAQS
  1. Why would a company choose to operate on a deficit budget in lieu of a balanced budget?

    The terms budget deficit and balanced budget refer to an entity's expenditures compared to its revenues during a budget period. ... Read Full Answer >>
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