When it comes to budgeting, it is a practice-makes-perfect type of thing. You will probably not get it exactly right the first month or two, but you will catch on soon enough.
It is important to create a budget for both your personal and business finances. The best thing to do is to keep business aside from professional, but it is hard to do so at the beginning when you are struggling to pay the bills. You need to make sure you are budgeting careful enough to set aside enough for bills, weekly expenses, as well as emergency/unexpected expenses.
An entrepreneur may deal with the frustration of having irregular income. Some months, business is booming and you have more money than you know what to do with. There are those other months that are slow and you find it hard to make ends meet. This is one of the major reasons why budgeting is so important to your business’s success. You need to know how much you need to survive, in order to make sure you are never short.
Rank Your Priorities
You need to sit down, get a notebook and pen and rank your priorities from most to least important.
Food, housing and utilities, personal care, and transportation will be the first things on your list. If you have ever paid attention to how much you spend on each thing, you will be able to make an educated guess on how much you need to set aside for each one. When the money comes in, you take care of one thing at a time until they are covered. If you happen to pay everything and still have a decent amount left over, this is going to your regular savings account. The regular savings account is money that you have stashed in the good times to make up for the months that you come up short in income. This is separate from your emergency savings, however, because you don’t touch the emergency savings unless you absolutely have to.
Budgeting For Your Business
Just like you prioritize for personal finance, you do so as well with your business. The first things that must be included in the business budget are: personnel, facilities costs, equipment, materials, and insurance.
Some Tips For Budgeting
- Every dollar has a purpose
Make sure that you are allocating every dollar to its destination. If it is not going to expenses, send it to a saving account.
- Use your resources
If you have a bank account somewhere, chances are they have online banking. Get on that. These now have so many features that allow you to track your expenses, see your balances daily, even some budgeting tools that can make all this so much easier.
- Be organized
Make sure you are keeping all your statements, bills, and correspondence organized somewhere. If there’s ever an issue where you need to look something up, you know exactly where to find it. This will also make it easier to do your taxes.
- ALWAYS know how much you have
You must know your account balances and cash on hand at all times. This will help you stay on top of your finances and make sure you are never paying any NSF-non sufficient fund fees, just because you were short a bit.
Making a budget sounds overwhelming; some may even resent the thought of it. The reality is however, if you don’t take control of your finances and have everything mapped out somehow, you may find yourself unprepared should anything unthinkable come up. It is essential to your success as an entrepreneur because you are in control. Your business and household are at stake if you are not planning like you should be. Don’t lose control of your money; take control of it.