What, Me Budget!?

A budget is a plan that allows you to set spending goals and track your actual cash flow to make sure you're staying within the boundaries you've set for your business. Whether you set up your budget quarterly or yearly, it's a projection of the amounts you allocate to each of your expenses based on the income you expect. A budget allows you to look at your expenses and make adjustments to bring your expenses more in line with your income.

How do you project expenses for the future? Part of the budgeting process is using the receipts, credit card bills and checkbook register you have from last year as a reference. That should give you a sense of where your money is going and what you can expect to spend in the future. It may also point out areas where you could cut back on your spending. If you are just starting out you will need to make educated guesses as to what your income and expenses will be. This would require some research but is actually not as difficult as it may seem.

One thing to remember - a budget is not set in concrete. It should be accurate and complete, but realize that there will always be changes and events that can affect your business. A budget, properly formulated, will be adjustable to give you the room you need to take advantage of unforeseen opportunities or emergencies.

A budget enables you to plan how you will spend your money before you reach for your checkbook or credit card. This will allow you to make more informed decisions, have better control over your cash flow and place your company on solid footing.