To spend less money than is budgeted, allocated, or expected. It implies a deliberate choice or an outcome resulting from factors that limit expenditure. This can occur in various contexts, from personal finances to government budgets. The term highlights the difference between actual spending and a pre-determined or anticipated level. It often carries a connotation of financial prudence, cost-effectiveness, or perhaps a degree of constraint or inefficiency if the underspending leads to unmet needs or opportunities. This verb is typically used in formal or semi-formal settings, often in reports, analyses, or discussions regarding financial performance.
Underspends meaning with examples
- The non-profit organization underspends its fundraising budget each quarter due to conservative fiscal management. This allows the organization to build up a reserve fund for future expansion, as well as provide greater security during any economic recession. The board of directors continually review the organization's spending to confirm that all available funds are spent for the welfare of the public.
- The city council, known for fiscal conservatism, consistently underspends on infrastructure projects. While this demonstrates an attempt to keep taxes low, critics argue that the underspending results in delayed repairs and a decline in public service quality. This often leads to delays in the repair work, which adds to the budget as the prices of the materials increase.
- During the first three months of the fiscal year, the marketing department underspends its budget, due to a delay in launching a major advertising campaign. The company will often choose to hold over some of the spending for the following fiscal year, to allocate additional resources to those projects. This allows time to plan the allocation of those funds.
- The research team underspends its grant money because the project experienced unanticipated setbacks. This caused delays in the recruitment of personnel and procurement of necessary lab equipment. This could either cause a negative impact on future funding or, conversely, will offer a better chance of obtaining a new grant, given the fact that the group is efficient.
- Because the manager implemented a new strategy, the project team underspends by 15% on supplies this year, due to improved efficiency. This is the result of a switch to a bulk-ordering system and a reduced need for specialized materials. The manager’s actions will likely lead to a bonus, based on the amount of money that has been saved.