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difference between the cash budget and long-term financial planning?

949 day(s) ago

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KathySimons

think about your cash budget as one of many, many inputs into your financial plan. for many households, their cash budget will be their fundamental source of wealth creation (via savings). your cash budget is basically the cash income and cash expenses you have in a budget period (period defined as day, week, month, year, etc.) because the cash that remains will be part of your savings (note, you may have non-budget savings, say 401K taken out prior to take home income).

so this cash income, cash expenses, and ultimately cash savings will be inputs into your financial plan. your financial plan is about creating a strategic roadmap of the financial objectives you aim to fulfill during and after your lifetime (leaving inheritance to loved ones is a post-lifetime financial goal, for example). your financial plan is your plan to fulfill your retirement, education, estate, insurance, investment, emergency fund, major purchase, among other objectives. and a good financial plan should be comprehensive and hence take all of this into consideration into a unified plan. you fulfill these goals via income and savings, hence cash budget is an input into your financial plan.

hope this helps.

regards,
valuesoft founder

see www.valuesoftinc.com

Posted 949 days ago

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sallyM

Cash budget is your monthly expenses from rent to laundry. Long term financial planning is investing your savings for home purchase, paying for children's college to having income for your retirement.
Two different kettle of fish

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