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Both a budget and a financial plan are ways to create a blueprint for your money. But what’s the difference and how do you figure out which one you need?

Both answer the question, “What’s possible?”


A budget is a spending plan for your income that seeks to answer, “What’s possible with my current income?”

How much can you invest each month? Is buying that bigger house a wise decision?

Without knowing and tracking your expenses and spending habits, you are flying blind and will have a hard time answering these questions. A budget allows you to see how much extra margin, or cash flow, you have. Once you know this, you can see what’s possible with your income, including how much you can save, invest or put toward other goals.

Financial Planning

Financial planning also addresses possibilities. However, a financial plan explores what’s possible with your future.

People assume the first step in creating a financial plan is mapping out your goals. I believe the most powerful part of financial planning is to see what’s even possible to begin with. Only then can you start creating realistic goals rooted in these possibilities.

Whereas a budget begins and ends with income and expenses, a financial plan considers future income, asset growth and risks that can derail your plans.

Both are living, breathing plans.


A budget can only work if it’s reviewed. Many well-intentioned budgets have failed because time was not spent actually tracking the funds.

If you use a budgeting software, the heavy lifting is done for you. You just need to review transactions and assign budget categories. Ideally, this is done on a weekly basis if not more often.

High-level reviews of your budget should be done every month. The goal of this is to spot trends, make changes and ensure you are on the same page as your spouse.

Financial Planning

I like to say it’s financial planning, not a financial plan.

Just like a budget, financial planning is not a “set it and forget it” document. During financial planning, you explore what’s possible, create realistic goals, buy insurance to minimize risks and establish saving and investing habits.

But the future is unknown, so we have to make projections and assumptions on things like income and asset growth, tax policies and inflation. This means financial planning is meant to be reviewed and adjusted throughout your career. 

However, a financial plan doesn’t need to be reviewed nearly as often as a budget. Do you need to review your life insurance every month? Of course not. Nor do you need to adjust your investing goals because the market went up or down.

Do you need a Controller or a CEO?

At some point in life, you might feel like seeking outside help with your finances. The question is, do you need a budget or a financial plan?

In the business world, corporations have a Controller and a CEO. The Controller is responsible for accounting, financial statements and budgets. The CEO is responsible for making strategic decisions and deciding where to allocate capital.

Both positions are critical to the company’s success even though they serve different objectives.

Like a budget, a Controller is focused more on today’s income and finances, while a CEO is more like a forward-looking financial plan.

What do you need? While everyone is thinking about the future, if you haven’t started saving or investing, chances are you need a budget to figure out your cash flow. Financial planning wouldn’t be much good at this point.

However, if you have margin in your cash flow and are consistently saving, taking the next step to figure out future possibilities could be the right move.

If this is you, consider partnering with Stewardship Financial to provide ongoing, expert guidance with your finances.