Budget

The term "budget" comes from the French word "bougette," meaning "little bag."  It originally referred to leather bags used to carry money.  In the 18th century the chancellor was said to be opening his budget when he presented his proposals.

The first recorded use of "budget" in relation to financial planning was in a 1733 pamphlet titled "The Budget Opened."

GOVERNMENT BUDGETS

Income tax was first brought into the UK by William Pitt in his budget of December 1798 as a temporary measure to finance the Napoleonic wars. It was abolished in 1802 during the Peace of Amiens but reintroduced in 1803 when hostilities recommenced.

The UK Chancellor of Exchequer, William Gladstone, because of public pressure abolished the tax on soap in 1853. Probably to make up for the substantial loss, he introduced in the same budget death duties.

Gladstone's 1853 Budget speech in the House of Commons lasted for 285 minutes (four hours 45 minutes), the longest continuous Budget speech ever.

On the other hand, the shortest UK budget speech was delivered by Benjamin Disraeli in 1867, clocking in at just 45 minutes.

In the UK, when setting off to make his speech, each Chancellor has traditionally been photographed holding up a battered budget box covered in scarlet leather; it is believed to have been made for Gladstone during his 1859–66 spell as Chancellor of the Exchequer.

David Lloyd George's People's Budget of April 29, 1909 was the first budget in British history with the expressed intent of redistributing wealth among the public. It took a year to be passed.

David Lloyd George and Winston Churchill

The U.S. federal budget is massive, but it wasn’t until the Budget and Accounting Act of 1921 that the U.S. government had a formal budget process. Before that, spending was less centralized, and departments would individually request funds from Congress.

The first televised Budget broadcast in the UK was made in 1953.

In 1953, the British Chancellor announced an increase in the sugar ration to allow people to bake celebratory cakes for Queen Elizabeth II's coronation.

Harold Macmillan’s 1956 budget speech introduced premium bonds to Britain with prizes of up to £1,000.

While alcohol is usually banned in the UK Parliament, the Chancellor of the Exchequer can drink when delivering the annual budget statement.

In 1983, the U.S. Social Security Administration accidentally issued $32.7 million in erroneous payments due to a budgetary miscalculation, making it one of the most notable budget blunders in history.

When a budget isn't approved on time in the U.S., it can lead to a government shutdown. The longest shutdown in U.S. history lasted 35 days, from December 22, 2018, to January 25, 2019, caused by a dispute over border wall funding.

The military budgets of countries can vary dramatically. For example, the United States has the largest military budget in the world, spending more on defense than the next 10 countries combined.

Countries often spend more than they earn in revenue. This is known as deficit spending, and it’s not always a bad thing. During times of economic downturn, governments may intentionally increase deficit spending to stimulate the economy, as advised by Keynesian economic theory.

CORPORATE  BUDGETS

In the 1970s, Texas Instruments popularized zero-based budgeting, where every expense must be justified for each new period, starting from a "zero base." This was a shift from the traditional method of justifying only new expenditures.

Movie budgets can be astronomical. The most expensive film ever made (adjusted for inflation) is Pirates of the Caribbean: On Stranger Tides (2011), with a budget of around $379 million. Conversely, some indie films have been made on a shoestring budget, like Paranormal Activity (2007), which was made for just $15,000 and grossed nearly $200 million.

PERSONAL BUDGETS

The 50/30/20 Rule is a popular personal budgeting rule of thumb popularized by U.S. Senator Elizabeth Warren in her book All Your Worth. It suggests that 50% of income should go to needs, 30% to wants, and 20% to savings or debt repayment.

A survey conducted by U.S. Bank in 2022 found that only 41% of Americans follow a budget, despite the general understanding of its importance in financial health.

The rise of technology has revolutionized personal budgeting. Apps like Mint, YNAB (You Need A Budget), and others make it easier for individuals to track their spending and stick to their budgets, often using artificial intelligence to offer financial advice.