# Budget

A budget is a plan for how you'll allocate your income across spending categories, savings, and debt payments over a set period — usually monthly.

## Why it matters

Budgeting is less about restriction and more about awareness. Most people underestimate their spending by 20-40% in categories like dining and subscriptions. A budget closes the gap between what you think you spend and what you actually spend, letting you redirect money toward what matters most.

Example

On a $5,000/month take-home income, you might allocate $1,500 to housing, $600 to food, $400 to transportation, $500 to savings, and distribute the rest across other categories.

## How Ray helps

Ray categorizes every transaction from your connected accounts and compares actual spending against your goals. Ask to instantly spot trends without manual spreadsheet work.

Terminal

`$ ray "how much did I spend on food this month vs last month?"`

## Related terms

[Zero-Based Budget](/content/learn/zero-based-budget/index.html) \ 
A zero-based budget assigns every dollar of income a specific job — spending, saving, or debt payment — until your income minus your allocated amounts equals exactly zero.  
[Cash Flow](/content/learn/cash-flow/index.html) \ 
Cash flow is the net amount of money moving in and out of your accounts over a period.  
[Savings Rate](/content/learn/savings-rate/index.html) \ 
Your savings rate is the percentage of your income that you save or invest rather than spend.  
[Net Income](/content/learn/net-income/index.html) \ 
Net income is your take-home pay after all deductions — federal and state taxes, Social Security, Medicare, health insurance premiums, and retirement contributions.  
[Sinking Fund](/content/learn/sinking-fund/index.html) \ 
A sinking fund is money you save incrementally for a planned future expense — like a vacation, insurance premium, or holiday gifts — so the cost doesn't hit all at once.

## Try Ray free

Open source, local-first, and takes five minutes to set up.

`$npm install -g ray-finance`  
[View on GitHub](https://github.com/cdinnison/ray-finance)