What is defined as a written cash flow plan?

A budget is defined as a written cash flow plan that outlines your expected income and expenses over a specific period, typically monthly. This financial tool helps individuals track their spending, prioritize their financial goals, and ensure they allocate their resources effectively. By having a clear budget, one can anticipate cash flow issues, adjust spending habits, and save for future needs or unexpected expenses.

In contrast, a cash flow statement summarizes cash inflows and outflows over a period but is not specifically a plan. A carbon check refers to a copy of a check that is retained for record-keeping, while the envelope system is a budgeting technique where cash is separated into envelopes designated for different spending categories. While each of these plays a role in managing finances, only a budget serves as a comprehensive cash flow plan to guide future financial decisions.