The Difference Between Budgeting and Planning

financial charts analysis
By Craig Hartman

3 minutes

A playbook guides your plan to success.

Sponsored by Plansmith

Are you really planning, or are you just budgeting?

By this I mean, are you filling out the numbers on a spreadsheet or planning the actions needed to make it a reality?

It’s always gratifying when all the numbers come together in a neat package showing expected growth and earnings for next year. And, there were likely many contributors who verbally expressed their goals and plans on how they are going to reach them. The compiled financial targets are then presented to and accepted by the board, and your monthly comparisons begin. Budget “predictions” are compared to reality. Variances from “budget” are explained, and business continues as usual. In essence, that’s budgeting.

So, what then is planning? Well, it’s something you are probably already doing but are not aware of, or perhaps may not have the resources to make the most of this dynamic component of your budget.

Planning focuses on how that budget will become reality. Vital responsibilities are assigned, timetables are set, and anticipated results are documented. In planning, execution is everything, and yet the “execution plans” are seldom, if ever, spelled out and tracked.

Ask yourself these questions to tell if you’re planning or just budgeting:

  • How often are comparisons made between proposed actions and the real outcomes?
  • How are the missed deadlines or unfinished campaigns dealt with?
  • Where do you maintain the description and timetables that allow tracking of the action plans?

Little Steps That Lead to Results

I'm not talking about budget predictions. I'm talking about the little steps that lead to the results. For example, let’s say your goal/objective was to grow your loan portfolio by 5%. To that end, you have decided to generate new leads by developing a new loan program. Next, you’d answer these three questions:

  • Who is responsible?
  • What are the steps needed to complete the promotion?
  • How many leads do you expect?

Once the plan is in place and being executed, leads will convert to opportunities, and opportunities will convert to new loan business. This is planning. Your budget shows the desired results, i.e. “We will grow loans by 5%,” but what supports these expected results? You should have a process in place to document the planned actions, specify who is responsible, assign a timeframe, and detail the expected outcome. Creating an objective like “grow loans 5%”; developing an action plan of who, what and how; and tracking results is called a playbook.


We all know that, like our budget, planned actions don’t always turn out as expected. Just as your budget is compared to actual as a variance, action plans are reviewed and discussed regularly to stay on course. By doing so, if the action item or timetable falls behind schedule, the planning team/committee can address the problem immediately.

For example, maybe the leads generated by the marketing campaign for the new loan product are falling short. Together you redefine the action item/marketing campaign and relaunch—while the goal remains the same.

If you’re not tracking your initiatives regularly, you’ll probably miss opportunities or be less agile in avoiding pitfalls that can significantly alter your results. A playbook allows you to control and track actions and outcomes in one organized location.

In conclusion, a budget without a playbook for execution is just numbers on a page. Rather than predicting a result and waiting to see if you’re correct, a playbook guides your plan to success. Take control of the future by looking ahead, deciding what actions are needed to succeed, and building an action plan to support your goals.

Go beyond just budgeting and build an action plan for success.

Craig Hartman is founder, chairman and CEO of Plansmith, a CUES Supplier member. His background in engineering and passion for planning has brought objectivity, creativity and horsepower to the company’s software products for more than 50 years. He believes credit unions deserve an exceptional planning experience with personalized customer service.

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