The Difference Between Saving Money and Budgeting?

Yes, there is a difference. Many people confuse “Saving Money” and “budgeting”. However, when you know the difference you can plan your money.

What is Budgeting

Budgeting is to plan how you are going to use the money you earn. It includes a list of expenses that you need to take care of. Drawing up a budget helps you to see whether or not you would still have money left after paying for all your expenses. It estimates the amount of income and expenses you may experience over a future period.

A budget represents your financial position. It is a good way to see if you are, financially, in a good place to live comfortably and debt free.

The word budgeting, however, has a slightly different meaning to “having a budget”. Budgeting is when you provide or put aside a certain amount of money for a specific purpose. So, you may be budgeting for a house, a car, etc. which is often referred to as saving.

What does Saving Money Entail

Saving money is putting money away for something. For example, saving money to buy a car or a house or even a pair of shoes. It is the process of taking a part of your income and putting aside for future use.

The extent to which you save depends on your preferences for future over present consumption. Saving would be similar to budgeting for something specific. In a sentence, they would mean the same thing

Budgeting vs. Saving Money

There is hardly any difference between the two. “I am budgeting for a car” vs. “I am saving for a car” is the same thing. However, “to save is not the same as “to budget”. Budgeting helps you save.

Saving is putting money away. A budget is a spending plan.