“According to our budget….”
“We don’t have budget for that….”
“Let me check the budget….”
“Does your budget balance?”
WHAT DOES THAT EVEN MEAN?!?!
“Budget” is a word that is commonly used but many small business owners getting started don’t aaaaaactually know what it means.
When I googled the definition and did some research, I was shocked by the lack of clear, concise information given.
Then I remembered 6-year-old Morgan. If she can get it, YOU can!!
Each month, when my parents gave me my allowance, I would separate it into three different juice box containers that spelled: JOY.
Jesus. Others. You.
I would put 1/3 toward Jesus and give it in the offering plate on Sundays. 1/3 to Others which I would use on birthday gifts, once-off occasions, Christmas presents, etc. Then the last 1/3 would go to buy something for myself that I needed or wanted.
If in a particular month, I didn’t spend the total amount in that juice box section, it would roll over to the next month and would be there when I needed/wanted to spend it.
The latter is true if I spent all the money in a specific juice box. For example, if all my money under “You” was gone, I couldn’t buy the thing I wanted. I needed to wait until next month when I could refill that juice box again.
This is exactly what budgeting is. Taking your monthly amount of money and separating it into different categories according to your life, needs, and wants.
The best part is, you determine the categories and the amounts. It’s that simple.
Want to know where to start? Download our accounting workbook that gives the 11 steps to creating a budget with a customized budget template included.
In our Master Your Finances Accounting & Bookkeeping course, I walk through the budget process step-by-step showing small business owners how to set financial goals and manage their budget each month going forward.