what is the difference between financial forecasting and budgeting?

Answer 1

Financial forecasting considers variables like how your dollar and spending power will be effected by interest rates, the price of goods and services, etc in the future.

Budgeting is more "real-time' dealing with the practical world... your capital and your financial goals.

You are very bright to realize that they go hand in hand.

For example you are budgeting to buy a house but know that the financial forecast for real estate is trending down now, so that tells you may not need to completely impoverish yoursefl by saving your money living like a monk (as in rice and beans every night, lol) in order to save for a down payment or if you save for a little longer you're going to get more house (because of the falling house price trend over time)

Or budgeting for that HUGE LCD TV, means that you won't need to save as much as HD TV prices are falling, etc, etc.

Of course the opposite is true if you are saving for college as the tuition price trend is going higher and higher.

Answer 2

financial forecasting and budgeting go hand in hand. It's really more simple with out the fine print then it sounds. You set yourself a budget with an X amount of years plan based on your financial resources. You incorporate the 2 together and find a way to live that is affordable with goals that are attainable with the amount of money you have and will have in the future. This is basically a way to show you how to save money and live within your limits to where you will have something later in life by using your smarts now.

Answer 3

The budgetting process involves preparing a detailed budget of how much income and expenses you will have in a given period of time, often a 12 month period and the expected bottom line or result you hope/expect to acheive. A forecast is an estimate or best guess as to what the result will be, compared to the budget, for the same time period.

Answer 4

financial forecasting is budgeting. given below are the definitions of budgeting highlighting the fact that companies try to forecast the expenditures for the near future and accordingly manage the available funds.

* The process of translating planning and programming decisions into specific projected financial plans for relatively short periods of time. Budgets are short-range segments of action programs adopted that set out planned accomplishments and estimate the resources to be applied for the budget periods in order to attain those accomplishments.
data2.itc.nps.gov/budget2/glossary.htm

* Time phased financial requirements.
www.welcom.com/content.cfm

* Outlines a retailer's planned expenditures for a given time period based on its expected performance.
www.prenhall.com/rm_student/html/glossary/b_gloss.html

* Planning for and estimating the financial position of an organizational entity for a definite period of time.
www.usoe.k12.ut.us/data/glossary.htm

* Budgeting is the process of predicting and controlling the spending of money within the organisation and consists of a periodic negotiation cycle to set budgets (usually annual) and the day-to-day monitoring of current budgets.
www.dream-catchers-inc.com/White%20Papers/glossary_of_terms-AM.htm

Answer 5

Waiting on more answers before I share my view

Answer 6

This is a great question, and one that made me curious for a long time.