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Do you know where your money goes each month?

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…

Why budget?

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?

List all your expenses & plan for emergencies

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;

  1. List & total your Income (it’s vital to know the size of your cake)

    Budgeting formula

  2. List all your fixed costs (costs that you incur each month even if you didn’t make any income e.g. Rent/ Insurance etc.)
  3. List what is most important to you (or business) first – so there is always money to cover these
  4. Include in the list all other costs you incur in the month.
  5. Separate needs & wants (wants can be added back to the budget when there is more income)
  6. Don’t forget to include a cost of “emergencies”
  7. Total your expenses/ costs
  8. Change the costs to fit your income (it may mean a smaller premises or car, just until your income increases)
  9. 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.