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Budget vs. Financial Plan

by User Not Found | Oct 13, 2015


You keep a drawer full of coupons for your next trip to the grocery store, you do countless hours of research before making any big purchase, and you make a deposit into your savings account every month. Your budget is absolutely perfect. But what if there was more you could do to protect your future finances?

While it may seem like budgeting carefully would be the only financial plan you need, the two are actually very different things.

This month / This month in ten years
A budget can help you make debt payments on time from month to month, but a financial plan lets you know exactly how long it will take to pay off a mortgage or auto loan and addresses the interest and taxes you’ll be paying as well.

With a solid financial plan, you’ll not only be able to plan for long-term expenses like college tuition, but you’ll also be able to set a course toward funding all of your financial goals. Whether it’s retiring early or buying the boat of your dreams, a financial plan maps out details that a day-to-day budget might miss.

Strategies / Management
Money management is incredibly important to a financial future, but solidifying a strategy for retirement and beyond may help prevent any surprise expenses from stopping you from reaching your goals.

Developing a trusted relationship with a financial adviser and laying out your financial goals, will allow them to look at your assets and create a concrete roadmap for you. A budget will most assuredly be a part of this financial plan, but so will countless other steps, like at what age you should start taking social security or the potential rate of inflation over the next 10-20 years.

Risky business
Carefully budgeting and putting away money in a savings account can definitely help you on a rainy day, but what about financial risks that can be identified early on and prevented? A strong financial plan will point out risky investments or let you know if it’s time to sell a property instead of relying on its rental income.

On top of that, your financial adviser will gauge your risk tolerance and will then use this measurement in partnership with investment time horizon to recommend sound investment choices. The portfolio you have 30 years before you retire is not going to look exactly like the one you’ll have 5 years before you retire, after all.

While managing a budget and spending is primarily an independent task, planning out for the next 10, 20, or 30 years requires resources you probably don’t have at your disposal. A financial advisor is trained to help you with this planning.

Remember: a financial adviser is your partner and will work with you every step of the way, not just dictate what happens with your finances. The provided documentation also makes it easier for you to discuss your plan with trusted family members and any other advisors with whom you may wish to share information.


Keeping coupons handy, making smart purchase, and having a substantial nest egg are all great ideas, but taking the next step and creating a financial plan will help to make sure you really are ready for what the future holds.

Ready to plan? Learn more about Columbia Bank’s skilled Financial Services Team.



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