What is the primary purpose of a budget?

• A. To track credit scores.
• B. To plan income and expenses over a period.
• C. To maximize investment returns.
• D. To review year-end tax forms.

Answer: (B)

A budget is a plan for how you'll use your money over a set period, typically a month. The primary purpose is to forecast income and map out expenses so you can cover essentials, avoid overspending, and set aside money for savings and goals. With a budget, you can see ahead of time whether your income will cover your planned spending and where you might need to adjust, helping you live within your means and build financial security.

Tracking credit scores is about monitoring your credit health, not organizing daily or monthly spending. Maximizing investment returns focuses on investing decisions rather than daily cash flow and expense management. Reviewing year-end tax forms relates to taxes, not the ongoing planning of income and expenses.