Budget Surplus

AAA

DEFINITION of 'Budget Surplus'

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.

INVESTOPEDIA EXPLAINS '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. Performance Budget

    A budget that reflects the input of resources and the output ...
  2. Zero-Based Budgeting - ZBB

    A method of budgeting in which all expenses must be justified ...
  3. Cash Budget

    An estimation of the cash inflows and outflows for a business ...
  4. Budget

    An estimation of the revenue and expenses over a specified future ...
  5. Revenue Deficit

    When the net amount received (revenues less expenditures) falls ...
  6. Static Budget

    A type of budget that incorporates anticipated values about inputs ...
Related Articles
  1. Six Steps To A Better Business Budget
    Entrepreneurship

    Six Steps To A Better Business Budget

  2. A Look At National Debt And Government ...
    Bonds & Fixed Income

    A Look At National Debt And Government ...

  3. Top 5 Budgeting Questions Answered
    Options & Futures

    Top 5 Budgeting Questions Answered

  4. 6 Months To A Better Budget
    Budgeting

    6 Months To A Better Budget

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center