If you’re someone who cringes every time you hear the word “budget” and you just want to stick your head in the sand, then listen up! Taming the budget monster is easier than you think and I can show you how.
But, before we begin, do you really know what a budget is?
A budget is actually a plan, nothing more, nothing less. Imagine a map that guides you through a city you’re visiting for the first time. Similarly, a budget guides you throughout your financial journey so you won’t get lost along the way.
I want to emphasize how important learning how to budget is, not just for adults but even for young kids.
Now that you know what a budget is, here are 5 simple steps that’ll help you make one you’ll want to stick to.
1. SET A GOAL
Truth is, you really can’t achieve much in life if you don’t set a goal first. Well, the same applies to budgeting. If you’re a small business owner or a freelancer, think about your business priorities and your WHY.
Why did you start your business in the first place? What do you want to achieve? What values does your business align with? Keeping all that in mind will help you set a budgeting goal that’ll be your guideline.
2. IDENTIFY AND TRACK YOUR INCOME AND EXPENSES
Now’s the time to get down to business! After setting your financial goal, you’ll need to identify the money you make each month but also track your expenses. You can do that by using a spreadsheet.
Take a long, hard look at where your monthly income goes. Ask yourself if you TRULY need all those things you spend your money on or if you could live without some of them.
Are you gonna wear that cute little dress you’re ogling in the display window more than once or do you just want to impress your girlfriends at your cousin Mary’s wedding next week? Yeah, I thought so…
So, the important thing is to separate your wants from your needs and take it from there.
Also, if you notice that you can cut down on some of your business expenses, by all means, do it.
Did you stop offering graphic design as a service to your clients? Awesome! It’s now time to say buh-bye to that Adobe Illustrator subscription you’ve been paying for years but no longer need. See what I mean?
On the other hand, you might want to increase a few of your expenses if they give you value and contribute to scaling your business.
For example, that business coaching program you’ve been thinking about enrolling in because you know it’ll help you grow your income, is definitely a worthy investment. So be prepared to spend that 5K, as it’ll make you triple your profit down the road.
As a savvy business owner, remember that each month you’ll have to put aside an amount for your taxes. Make sure to deduct about 20% of what you earn so that when tax day comes you won’t be caught unaware.
Lastly, don’t forget to include in your expenses any amount you pay toward your debt, be it a student loan or a credit card debt.
3. START AN EMERGENCY FUND
I cannot stress that enough. ALWAYS put away some of your money each month for an emergency because life happens and you can never tell what tomorrow brings.
An emergency fund can literally be a lifesaver. If for whatever reason, you’re not able to work and produce income at a certain point, it’ll cover your basic expenses.
Even if you can only put aside a small amount at the beginning, keep at it and you’ll see that it’ll grow little by little in no time without you even realizing it.
4. PUT YOUR PLAN INTO ACTION
Enough with the talk, now let’s take action!
Having identified and tracked your income and expenses, start implementing your budget. Double-check that your monthly income is enough to cover your expenses and keep comparing what you spend to your budget.
That’s how you’ll meet your financial goal and stay on track.
5. ADJUST AS YOU GO
Congrats, you now have a budget in place and you’re able to monitor everything you earn and spend!
But this doesn’t mean that it’s set in stone and you can’t modify it when changes happen.
Monitor, reevaluate, and adjust as you go.
Wanna learn more about how I can help you free your mind and master your finances TODAY?
Sign up for my free class and let’s embark on this amazing journey together!