Stick to your Budget
Now that you have made your goals, planned for the new year, and created your budget, you need to stick to that budget! Many people have told me over the years that they don’t bother creating a budget because they know they will not be able to stick to it. So how do you make sure you’re getting the most out of your budget and making it work for you?
The first thing that will help you stick to a budget is making sure your budget will help you reach your goals. Having concrete goals makes it much easier throughout each month to think about why you need to stick to your budget. For example, let’s say one of your goals is to pay yourself more, and you know you need to cut expenses to do that. Whenever you are making purchases, ask yourself if it is necessary for your business? And if not, then it means you will pay yourself less as an owner. So you’re not just buying $25 in office supplies that you don’t need. You’re lowering the amount of money you can pay yourself by $25. This may not seem like a lot, but it can add up quickly.
The next thing to do is to remember that a budget is just an estimated guess or ideal Income Statement. That means that your Income Statement will never exactly match your budget. Sometimes it may not come close! The point of a budget is to help you plan and stay on track. Sometimes expenses will be more than planned, or revenue will be less, and that’s perfectly normal. You may make up those differences in months to come. You may also realize that you overestimated your revenue and need to adjust your budget to be closer to reality.
Finally, adjust your budget throughout the year. Again, a budget is just an estimated guess. Things can change daily in the life of your business, so your budget may need changing also. Look at it at least quarterly, look for significant differences, and see if that is a trend or one-time difference. Also, make sure you adjust for new expenses or revenue, or changes that you know are coming.