Teresa L. Turner

Teresa L. Turner is a Financial Advisor with Independent Investments Group, a financial advisory practice of Ameriprise Financial Services, LLC. In Florence, Alabama. She specializes in fee-based financial planning and asset management strategies and has been in practice for 24 years. To contact Teresa, call 256.765.3622 or email Teresa.Turner@ampf.com

Budgeting and financial planning are two terms that are easily confused. Both apply to personal finances and both are activities that can help you be financially successful now and in the future. Yet, while the two go hand-in-hand, they are not the same. Here are ways they differ and how they can work together to help you accomplish your goals.

Budgeting sets guardrails for your spending. The goal of budgeting is to help people live within their means. A budget predetermines how much you can spend during a certain length of time based on your actual income. Individuals who follow a budget are better equipped to avoid overspending.

To create your budget, divide your income across your expenses for a given timeframe. This timeframe is typically tied to your pay schedule, whether weekly, biweekly or monthly. Fixed expenses, such as rent and childcare, take priority. After accounting for fixed expenses, spending parameters are set for necessities that vary in cost, such as food, transportation and clothing. Remaining dollars can be allocated for discretionary spending, such as dining out and entertainment. A budget may also include a rainy day or vacation fund.

Remember that budgeting is an active process. To be successful, you need to track your spending and be prepared to make adjustments. A budget that offers some flexibility is generally easier to follow.

Budgeting can help you spend within your means. However, you can budget forever and still not reach the type of long-term goals financial planning is designed to help you achieve.

Financial planning provides a vision for your financial future. Unlike budgeting, financial planning is not limited to the present. Your financial plan considers where you are now, as well as where you want to be in the future. It requires vision.

The purpose of a financial plan is to formulate action steps to help you afford your life goals. It charts your course to reach milestones, such as homeownership, starting a family, higher education and retirement.

Like budgeting, financial planning is a dynamic process that benefits from both regular review and adjustments. A financial setback, windfall or other shifts in your life circumstances will affect your financial plan.

A certified financial planner and/or advisor who offers financial planning services can help you create a tailored financial plan. This professional can be a resource for objective advice about financial decisions going forward. Your comprehensive financial plan will likely utilize insurance and investment products to help you protect your assets and grow your savings.

Budgeting and financial planning work well together. Following a budget can help you manage your money and avoid debt, but a financial plan can help you achieve your long-term financial goals. Talk to a financial professional today to learn how you can benefit from both of these important financial disciplines.

Teresa L. Turner is a Financial Advisor with Independent Investments Group, a financial advisory practice of Ameriprise Financial Services, LLC. In Florence, Alabama. She specializes in fee-based financial planning and asset management strategies and has been in practice for 24 years. To contact Teresa, call 256.765.3622 or email Teresa.Turner@ampf.com