People often don’t know where to start a Budget and so they never do… Don’t be like that – it’s much easier than you think! Let us help you get started…
If you don’t control your money, it will control you! The benefits of budgeting are many and include;
- Limiting your costs
- Creating a financial plan for what you want in life & your business
- Helps you identify where your money is going
- Eliminating the worry of money
Before you begin your budget, ask this important WHY question & make sure that it has significant meaning and importance to you, as this will help you stick to that budget.
How to budget?
I like to think of budgeting like cutting up a cake – you need to cut carefully to make sure there is enough for you after everyone has taken their slice. The cake is the Income (& unfortunately limited in size). We’ve all heard the saying that you need to cut your coat according to your cloth … we just often don’t want to (especially in an instantaneous gratification world)!
People start budgeting by putting in what they already pay… the expensive house & car payments & wonder why they run out of money for the other requirements. We need to rather establish how much we have & then decide how to allocate it.
You try – follow these simple steps to gain control over your personal/ business’ money;
- List & total your Income (it’s vital to know the size of your cake)
- List all your fixed costs (costs that you incur each month even if you didn’t make any income e.g. Rent/ Insurance etc.)
- List what is most important to you (or business) first – so there is always money to cover these
- Include in the list all other costs you incur in the month.
- Separate needs & wants (wants can be added back to the budget when there is more income)
- Don’t forget to include a cost of “emergencies”
- Total your expenses/ costs
- Change the costs to fit your income (it may mean a smaller premises or car, just until your income increases)
- Remember to keep the costs less than the income to keep yourself out of financial issues!
The last thought I will leave you with is that if your cloth is the size of a waste coat you can’t have a trench coat size car or house… something a lot more of us need to learn. If you need help understanding your business finances – contact us.