What is Daily Budget?

Your daily budget is the amount that you’re willing to spend on a specific AdWords campaign each day. AdWords displays your ads as often as possible while staying within your daily budget. When the budget limit is reached, your ads will typically stop showing for that day. How quickly your ads are shown during a given day is determined by your ad delivery setting.

On any single day, the AdWords system may deliver up to 20% more ads than your daily budget calls for. This helps make up for other days in which your daily budget is not reached.  Google Help–>

What is Monthly Budget?

A monthly budget is the amount you’re willing to spend per month. The main difference from the daily budget setting is that you can review your performance and campaign spending based on a monthly goal rather than a daily goal.

Google have rolled out the monthly budget option to just a few accounts, and this feature is still under beta testing. It works quite simple. Instead of specifying a daily budget, they turn calculating it for 30 days, you can straight away set a monthly budget. This comes as an advantage when on certain days you have an extraordinarily high traffic, and other days very lean traffic. Both daily and monthly budget have their own pros and cons, and depending on individual needs, the advertisers are given an option. However, at this moment, the feature of monthly budget is not available in all accounts.

How to change your budget for an ad campaign:

• Sign in to your AdWords account at http://adwords.google.com.
• Click the name of the campaign you’d like to edit.
• Click Edit Campaign Settings near the top of the campaign overview page.
• Under Budget Options, enter a new daily budget.
• Select a delivery method: standard or accelerated. This option controls how quickly your ads are shown during the day. Standard delivery is automatically selected for you.
• Click Save Changes.

See http://adwords.google.com/support/ for more info.