What is the difference between forecasting and budgeting?

What is the difference between forecasting and budgeting?

Forecasting is predicting future financial outcomes based on historical data, while budgeting is creating a plan for future spending.

Can you give me an example of each?

Sure! Forecasting might involve estimating next quarter's sales based on past trends, while budgeting would involve setting a limit on how much to spend in that quarter.

Which one is more important for a business?

Both are important! Forecasting helps in planning and decision-making, while budgeting ensures that spending aligns with financial goals.

How often should a business update its forecasts and budgets?

Businesses should review forecasts regularly, often quarterly, and budgets should be revisited annually or when significant changes occur.