Budget Analyst vs. Financial Analyst: What's the Difference?

If you like playing with numbers, examining budget details, and analyzing financial data, a career as a budget analyst or financial analyst could be the right fit for you. But there are some important differences between the two jobs when it comes to duties, skills, and salaries. In this guide, we dig into some of the key differences.

Budget Analyst vs Financial Analyst

The terms “business analyst” and “financial analyst” are often used interchangeably. And while professionals who occupy those roles often overlap in skills and responsibilities, the two roles are in fact distinct professions that are equally important to the financial health of both private companies and public agencies.

At the heart of both roles is financial management—business analysts and financial analysts monitor the budgets and investments of their organizations and translate technical information into accessible recommendations for top executives. When put into action, this can take the form of offering investment advice; it can mean recommending that a company expand and hire more employees because the budget allows for it, or pushing for an organization to scale back and cut costs; it can affect the types of projects that are green-lit during a certain quarter, and it can determine which businesses survive an economic downturn.

The importance of business analysts was most recently highlighted during the Covid-19 pandemic when companies of all sizes had to rapidly pivot to new business models, decide whether to conserve cash, or invest even more in their companies and crisis-plan for the unknown. Budget and financial analysts helped companies quickly adapt to new social and economic conditions, which led to many organizations not only surviving the worst of the pandemic—but also thriving.

What Is a Budget Analyst and What Does a Budget Analyst Do?

What Is a Budget Analyst and What Does a Budget Analyst Do

As the name suggests, budget analysts work with program managers and business leaders to develop and manage an organization’s budget. The budgeting process typically focuses on revenue, expenditures, and compliance, and budget analysts often perform cost-benefit analyses to evaluate and review financial requests, program tradeoffs, funding levels, and alternative funding methods. Day-to-day, budget analysts examine past budgets, keep track of an organization’s actual spending, allocate and review department budgets, and anticipate future financial needs. 

For example, a budget analyst working in local government might manage funding allocations, hear funding requests, explain the approved budget to an agency head or government officials at legislative committee hearings, draft budget-related legislation, and maintain income and expenditures in spreadsheets. A budget analyst working in the private sector likely shares similar responsibilities, answering to executives such as the chief operations officer and chief financial officer, maintaining the organizational budget, and helping determine an organization’s financial priorities.

Demand and job growth for budget analysts in the U.S. is growing at a steady pace, according to the Bureau of Labor Statistics. The median salary is $78,970, with top industries such as government, science, technology, and educational services often paying more.

What Is a Financial Analyst and What Does a Financial Analyst Do?

What Is a Financial Analyst and What Does a Financial Analyst Do

Where a budget analyst typically looks inward and works with an organization’s actual budget, it helps to think of financial analysts as looking outward—observing market trends, contextualizing for top managers what the movements of the financial markets might mean for a company, analyzing data on competitors, offering projected results on business performance, and providing recommendations to help business leaders make informed financial decisions.

There are four main types of financial analysts:

  • Portfolio managers. As the name suggests, financial analysts who specialize in portfolio management look after an organization’s investment portfolio and help business leaders determine where they should focus their assets. 
  • Fund managers. Financial analysts specializing in fund management typically work with hedge funds, pension funds, or mutual funds and focus on making split-second trading decisions. 
  • Ratings analysts. These financial analysts study other companies to determine whether their stocks are worth investing in. 
  • Risk analysts. Risk analysts try to limit their organization’s potential for loss by assessing the risks of current investments and diversifying future investments. 

Similar to budget analysts, financial analysts are experiencing steady job growth. The median salary is $83,660, with top industries such as finance and securities, technology, and insurance often paying more.

What Is the Difference Between a Financial Analyst vs. Budget Analyst?

What Is the Difference Between a Financial Analyst vs Budget Analyst

There is often some crossover between budget analysts and financial analysts: both have strong analytical skills and math skills, both can help rein in spending and lead companies away from bad investments, and both focus on the long-term financial health of an organization. But, in addition to some of the aforementioned differences in specialization and responsibilities—with budget analysts reviewing internal budgets and financial analysts looking to external markets—the two roles also involve different types of training, day-to-day duties, and offer different types of work opportunities.

Budget analysts typically have backgrounds in accounting or finance, and their primary responsibility is to help organizations spend wisely. The biggest sector for budget analysts is government, closely followed by financial, healthcare, and education.

Financial analysts typically have a background in finance, data science, or computer science, and their primary responsibility is to study financial markets and trends to help organizations forecast, project, and plan for the future. The biggest sector of financial analysts is banking, with other financial and credit institutions also being big employers.

Budget Analyst vs. Financial Analyst: Required Skills

While the formal education requirements for both budget and financial analysts can vary from company to company, many budget analysts hold at least a bachelor’s degree or equivalent in accounting or finance, with a focus on business, math, public administration, or statistics. Those working for local, state, or federal government can also receive additional credentials from the Association of Government Accountants, although maintaining the certification requires continuing education. 

Financial analysts commonly hold a bachelor’s or master’s degree in economics, finance, accounting, or business. Many also hold an MBA or undergo CPA and/or CFA training. Financial analysts can become CFA-certified if they hold an undergraduate degree, have several years of work experience, and pass a series of exams.

Certifications aside, both budget analysts and financial analysts need to be able to think analytically, communicate clearly, be detail-oriented, make good decisions under pressure, be comfortable using software and math for forecasting and evaluating investments, and know how to make recommendations that will be understood and well received by their intended audience.

Budget Analyst vs. Financial Analyst: Which Is Right for You?

Budget Analyst vs. Financial Analyst: Which Is Right for You

Both careers are well suited to analytical, detail-oriented individuals who are comfortable with math and technology. That said, there are elements of both professions that draw in different types of people.Financial analysts spend most of their time dealing with investments, forecasting, and market trends, which means the role is best suited to those who enjoy working with statistics, gathering information at the macroeconomic level, and assessing the financial fundamentals and balance sheets of other companies. There can also be lots of travel involved because many financial analysts will visit other companies to observe their operations.Budget analysts, on the other hand, focus more on operations and management. The role is best suited to those who have an investigative mindset and enjoy digging into data to make financial recommendations. Natural problem-solvers who like helping organizations come up with alternate solutions to budget and planning constraints are also likely to thrive in this role.

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