Difference between budgeting and forecasting

Question

Accepted Answer

Budgeting is a plan for future expenses while forecasting is an estimate of future financial outcomes.

Budgeting involves setting financial goals and creating a plan to achieve them.
Forecasting involves predicting future financial outcomes based on past performance and current trends.
Budgeting is typically done on an annual basis while forecasting can be done on a regular basis.
Budgeting is more rigid and inflexible while forecasting is more flexible and adaptable.
Budgeting is used to control expenses while forecasting is used to anticipate future financial needs.
Example: A company may create a budget for the upcoming year to plan for expenses such as salaries, rent, and supplies. They may also use forecasting to predict future revenue based on sales trends and market conditions.
Example: A financial planner may create a budget for a client to help them save for retirement. They may also use forecasting to estimate future investment returns based on market trends and economic conditions.

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