Budget Surplus

Loading the player...

What is a 'Budget Surplus'

A budget surplus is a situation in which income exceeds expenditures. The term "budget surplus" is most commonly used to refer to the financial situations of governments; individuals speak of "savings" rather than a "budget surplus." A surplus is considered a sign that government is being run efficiently. A budget surplus might be used to pay off debt, save for the future, or to make a desired purchase that has been delayed. A city government that had a surplus might use the money to make improvements to a run-down park, for example.

BREAKING DOWN 'Budget Surplus'

When spending exceeds income, the result is a budget deficit, which must be financed by borrowing money and paying interest on the borrowed funds, much like an individual spending more than he can afford and carrying a balance on a credit card. A balanced budget occurs when spending equals income. The U.S. government has only had a budget surplus in a few years since 1950. The Clinton administration (1993-2001) famously cured a large budget deficit and created a surplus in the late 1990s.

RELATED TERMS
  1. Trade Surplus

    An economic measure of a positive balance of trade, where a country's ...
  2. Adjusted Surplus

    The surplus (assets minus liabilities) of an insurance company ...
  3. Capital Surplus

    Equity which cannot otherwise be classified as capital stock ...
  4. Current Account Surplus

    A positive difference between a nation’s savings and investment. ...
  5. Treasury Budget

    Data released by the U.S. Treasury on a monthly basis that accounts ...
  6. Producer Surplus

    An economic measure of the difference between the amount that ...
Related Articles
  1. Investing News

    Japan’s Current Account Surplus Jumped in February

    Japan logged its largest current account surplus since March 2014 in February, assisted by higher income from overseas investments and healthy spending by foreign tourists.
  2. Budgeting

    The Complete Guide To Planning A Yearly Budget

    A personal budget is a useful tool for tracking your income and expenses.
  3. Budgeting

    3 Reasons To Buy Government Surplus for Your Small Business

    Learn why it's wise to access government surplus auctions to buy furnishings, equipment and other items to start a new business or expand an existing business.
  4. Options & Futures

    Damage Control For A Busted Budget

    Budgets break down all the time. Here are some ways to get it back on track.
  5. Budgeting

    Budgeting Basics - Conclusion

    By Amy FontinelleBudgeting is an important component of financial success and one that's not difficult to implement. Let's recap what we've learned in this tutorial: Budgeting isn't just ...
  6. Budgeting

    Bailing On Your Budget

    Being realistic and honest with yourself will help you determine if you should throw away your existing budget.
  7. Economics

    What does Current Account mean?

    The current account reflects the difference between a country’s savings and investments.
  8. Budgeting

    5 Reasons Why You Can't Stick To Your Budget

    You want to stay on track with your finances, but these fatal budgeting flaws may be holding you back.
  9. Budgeting

    The Complete Guide To Planning A Yearly Budget - Creating A Yearly Budget

    There are a number of ways that you can approach a yearly budget. Some may prefer to add up all income for the year and all expenses for the year, and divide each category by 12 to come up with ...
  10. Economics

    Explaining the Cash Budget

    A cash budget is a plan for the inflows and outflows of cash for a business or an individual.
RELATED FAQS
  1. What is the difference between consumer surplus and economic surplus?

    Learn the difference between consumer surplus and economic surplus, how the concepts are related and the important theoretical ... Read Answer >>
  2. For what purpose is the consumer surplus figure used?

    Understand who uses the consumer surplus figure and why it's used. Learn why companies want to minimize consumer surplus ... Read Answer >>
  3. What's the difference between economic value added (EVA) and producer surplus?

    Understand economic value added and producer surplus. Learn why companies focus on economic value added and producers focus ... Read Answer >>
  4. What does it signify about a given product if the consumer surplus figure for that ...

    Find out about high consumer surplus and what it means for utility and the structure of supply and demand in the market for ... Read Answer >>
  5. What's does the current account have to do with the trade balance?

    Learn how a nation's trade balance is factored into its current account, and the differences between these two common terms. Read Answer >>
  6. Why should I bother creating a budget?

    Creating and using a budget is a valuable tool for all demographics; it's not just for those who need to closely monitor ... Read Answer >>
Hot Definitions
  1. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  2. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  3. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  4. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  5. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
Trading Center