I was listening to a podcast today and the question was asked – “What are the things we claim we want to do but don’t actually do it?”
I believe there are two main claims. The first one is that people want to go to the gym more often. The other one is that people would like to have a budget!!
Read any business or personal finance book. Go to any seminar regarding personal or business finance. Attend a business webinar. The one thing they all have in common is that people should have a budget for both there business and there personal life. Nearly everyone walks away from the seminar or finishes reading the book and says – “Yeah I need a budget”
But that is as far as it ever goes. Of 100 people at a seminar, only 2 will start their budget. I wonder why that is? Is it too hard? No! Does it show up spending habits we don’t want to admit too? Possibly!
Preparing a budget for your business is one of the most important things that you can do. A well thought out budget can give your business a very clear direction on where it is heading.
Lets get started and produce a budget for next year. How do you go about it?
The easiest place to start is with your actual income and spending from the last 12 months. Using a spreadsheet, layout the 12 months of the year and put your income and expense categories down the left hand side. Then fill the spreadsheet with the previous 12 months information.
The most important element of the budget is to determine what your goal is. Where do you want to be financially in 12 months time? Once you have decided this you can start modifying your numbers to help you achieve the goal. A budget is the easiest way to determine if you are staying on track. It can also help you get back on line if you have strayed.
The next step is to analyse each line and make the necessary changes to help you achieve your goals. Carefully analyse your income and expenses to determine areas where you can cut costs or increase income.
Once the budget is set then it is important to regularly compare your budget with your actual spending. I would suggest monthly.
Good luck and happy budgeting