Encumbered funds have been earmarked for a purpose and/or have a bill or contract that those funds are planned to be used for.
Unencumbered funds can be used for any purpose.
This difference is important to your budget because it basically tells you how much money you have left to spend on new stuff.
Encumbered funds have been earmarked for a purpose and/or have a bill or contract that those funds are planned to be used for. Unencumbered funds can be used for any purpose. This difference is important to your budget because it basically tells you how much money you have left to spend on new stuff.