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.

INVESTOPEDIA EXPLAINS '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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