Budget vs. Forecast — What’s the difference, and how do you create each effectively?

[ankita]

I often see the terms budget and forecast used interchangeably in business finance, but I know they’re not exactly the same.


From what I understand, a budget is a financial plan that outlines expected income and expenses for a period, while a forecast updates those expectations based on actual performance and new information

 

[BlissCore]

You’re on the right track! A budget is basically a planned roadmap it sets targets for income, expenses, and investments for a specific period, often a year, and acts as a baseline for performance. A forecast, on the other hand, is more flexible and updated regularly it adjusts expectations based on actual results, market changes, or new business insights. To create them effectively, start your budget with realistic assumptions and historical data, then use ongoing financial performance and trends to refine your forecast throughout the year.