How to begin building a budget: A three tiered approach that works for your personal and business finances.
Thinking about money gives most people the yucks. Where it all goes, how to get more and what if....oh, say A WORLDWIDE PANDEMIC SHUTS MY BUSINESS DOWN?!?! It's enough stress to give ya an oozing rash. But you know we have your back, so here are some strategies to employ to get your personal and professional finances in order so you can keep track of it all and prepare for whatever comes your way.
First, tell me what you want....what you really, really want. I'm kidding, actually, I want to know what you NEED. The barebones, no shit number you really have to have to keep it all afloat. One of my favorite bloggers calls this the "ramen noodle" number--as in you may be eating ramen noodles, but you're eating and there's a roof over your head. Hopefully, things will never actually get this desperate, but it's good to know what that number is.
Second, add in the next tier of needs. For most business owners these might be things like advertising or extra training. You definitely need these things for long term success, but they are things you could cut to save some money in an emergency.
Last, are the wants. I'm not calling these things frivolous by any means. They are wonderful and important tools for business owners and can really add to the bottom line. But if you are absolutely things that could be delayed until you are financially more stable. Examples might be client gifts, employee appreciation events, or giveaways and sponsorships. Favorite blogger calls this the "sushi number".
As an entrepreneur, it's tempting to leave every dime in your business and not pay yourself. Maybe it's even a case of being new to the game and not yet having the income to draw a paycheck, and that's cool. But get in the habit of taking a little something on a regular basis no matter how small and check in regularly with your financial professional to assess your cost of goods and expenses so you are maximizing your profits. Over time, you will be able to increase your pay and find a nice comfortable and predictable spot where you aren't stressing about it.
When it comes to managing your finances are you a cross your fingers and hope person, or do you have a plan? Would you like us to talk more about personal finance and budgeting? Tell us in the comments!
