simplehomefinances

SHF BLOG

Tips and Tricks for managing your finances!

Spending plan vs budgeting

Some people say that a spending plan and a budget plan are synonymous. Others say that the difference between the two is night and day. So how do we wade through this confusion?

Webster’s Dictionary defines a budget as: “a plan used to decide the amount of money that can be spent and how it will be spent.” The word “budget” has become feared and hated, which led to the conception of the kinder, and gentler term “spending plan.” In reality, both fit the Webster’s definition and are just simply, plans.

That should clear things up right? Not quite, but take notice: a budget is a plan for how to spend your money. A spending plan? A plan for how to spend your money. The real issue is that there is one thing missing, our plan shouldn’t be just about spending but also about saving money too.

In summary – A budget plan and a spending plan are both just plans for how to spend and save your money.