If You Don’t Have a Budget, You’re Probably Bleeding Money!
If you are hording your canned goods and tools waiting for society to fall apart so we can go back to trading… then this article isn’t for you. The trading of goods and services is something almost as old as humanity itself, and currency developed sometime around 700-500 BCE. Wouldn’t you know it, the concept of money was so successful that we continue it to this day. Money isn’t going anywhere and proper money management is hugely important to keeping you not only afloat, but also profitable in every regard of your business.
If you don’t have a budget, you’re probably losing or wasting money without any record of how or why. That’s bad! Below, let’s look at four tips you can use to help your budget be as efficient as possible.
Don’t Horde Your Funds.
Some people treat their budget like a giant pile of money you take from whenever you need. That only works if you’re Harry Potter…or your Smaug the Dragon. If you want your money to work for you then you need to count your pennies and measure your expenses in order to create spending and saving data. Knowing how much you have, how much you’re earning, and how much you’ll be spending is basic data needed to make sure you don’t over draw or over save any of your expenses. If you’re not sure where to begin, hunt around online for some budget templates. They may not fit your need exactly, but they will get you moving and you can customize as you go.
Keep Separate Records For Different Streams of Income
Budgets aren’t just there to keep a record of your spending. They are also there to measure your earnings. Income can fluctuate and it’s important that you know how much you are bringing in to make sure you can still cover all of your bills. More-so, not only should you have departments, you should also divide your budget into where your money is coming from (i.e. Sales, Downloads, Donations, Services, Products, etc.). Some products may sell better depending on the season, location, or strategy. Being able to chart when and why income fluctuates will help you know what to prepare for and what to focus on.
What Are Your Magic Numbers for the Month, Year, and Life?
Every expense in your budget has two magic numbers. One is the minimum that is needed to pay various bills. The other is the number you are saving towards to meet a goal, start a project, make your next big purchase, etc. One of the biggest dangers of not having a budget is not knowing what you need to survive. Sometimes these numbers do change, but the longer you keep track of you budget the more prepared you’ll be. Knowing what your magic numbers are can keep you focused when it comes to what you’re spending your money on month to month.
Have a Miscellaneous Fund.
The best budget in the world can’t account for everything. There are any number of situations that can’t be predicted or have their budgets planned. Some things you just won’t know the cost of until it arrives. Just because these things can’t be predicted doesn’t mean you can’t be prepared for it. A Miscellaneous Fund is there for those surprise needs, or even those needs you forgot about. It’s your backup for your back up.
Use the tips above to build a better budget today!
Though not the most enjoyable part of running a business, having a budget is by far one of the most necessary. The good news is that the longer you have your budget going, the easier it becomes. If you’re still looking for more budget help, check out our previous article, “5 Apps To Keep Your Communication and Organization Running Fast!” where we discuss Shoeboxed and Neat, two apps that are great for tracking spending. If you have any budgeting tips of your own that we haven’t mentioned here be sure to share them in the comments below!