What is the difference between budgeting and forecasting?

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Accepted Answer

Budgeting involves setting a financial plan for a specific period, while forecasting predicts future financial outcomes based on current data and trends.

Budgeting is a detailed financial plan for a specific period, usually a year, outlining expected revenues and expenses.
Forecasting involves predicting future financial outcomes based on current data and trends, helping in decision-making and planning.
Budgeting is more rigid and focuses on achieving specific financial goals, while forecasting is more flexible and allows for adjustments based on changing circumstances.
Budgeting is typically done annually, while forecasting can be done on a regular basis to adapt to changing market conditions.
Examples: Budgeting would involve setting a budget for marketing expenses for the upcoming year, while forecasting would predict sales revenue for the next quarter based on current market trends.

What is the difference between budgeting and forecasting?

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