Tracking vs. Budgeting
When working with clients on financial and paper organization, often the topic of budgeting comes up. Many times when I ask client’s if they budget, they say, “Yes.” When we actually dig and and review their system, I quickly realize what they actually mean is that they “track their purchases,” not “budget.”
I started to realize that the idea of tracking vs. budgeting can be very confusing! Hopefully this information below will be helpful for distinguishing the two actions.
TRACKING: “Rear View Mirror” Approach – Recording money “after the fact”
- Online Tracking
- Credit Card
BUDGETING: “Trip Planning” Approach -Purposing money with a forward-looking view
- Trending: where money has gone
- Evaluating: how much is coming in
- Dedicating: giving & saving
- Allocating: based on priorities
Now that you understand the difference between the two, I hope you can start to sense why budgeting is so much more in depth and purposeful!