Budget planning is the process of creating a financial plan that outlines expected income and expenses over a specific period, usually a year. It helps individuals and organizations allocate resources effectively, ensuring that they can meet their financial goals while avoiding overspending. By tracking income sources and categorizing expenses, budget planning provides a clear picture of financial health. Effective budget planning involves setting realistic financial goals, monitoring spending habits, and adjusting plans as needed. Tools like spreadsheets or budgeting apps can assist in this process. Regularly reviewing the budget allows for better decision-making and helps maintain financial stability over time.