It asks, “Who are you? Who do you want to be? How should you modify your current lifestyle to achieve the lifestyle of your dreams?” Perhaps the most important question of financial planning is “How can you get the most out of your life?”īy asking these questions, financial planning forecasts realistic steps you can take as new opportunities arrive. Financial planning also uses math to make decisions about money, but it’s about reaching larger, more long-term goals. Not only does this ensure you balance your checkbook every month and pay your bills in a timely manner, it can give you financial wiggle-room for emergencies or even help you save for retirement.įinancial planning, on the other hand, considers what you can be with your money.įinancial planning considers your entire life. The greatest benefit to budgeting is that you consciously decide where your money is going. Once you have a plan in place, you build a spreadsheet so you can trace where you’re spending money. You look at how much you earn, determine how much it will cost to maintain your current lifestyle, and then decide on a plan. Financial planning, on the other hand, looks at your current financial state and builds a comprehensive portfolio by predicting future cash flows, asset values and withdrawal plans based on information that’s currently available.īudgeting, ultimately, considers what you do with your money.īudgeting focuses on immediate money issues. It evaluates how much you make, measures how much you spend, and helps you spend less than what you bring in. The financial planner knows slow and steady wins the race as long as every step moves in the same direction.īudgeting is an incredibly important financial strategy. The budgeter moves quickly to meet short-term goals, without considering the long view. In the world of finances, this is the story of the financial planner and the budgeter. The tortoise keeps on, slow and steady, and the hare awakes to find he’s lost the race. The hare agrees, bolts past the tortoise and then, certain he’ll win, takes a nap break halfway through. Everyone knows the story of the tortoise and the hare: A speedy hare ridicules a slow-moving tortoise until the tortoise proposes a race.
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