When you hear the word budget, do you cringe? Does it make you want to run away? It seems the typical response, especially in the creative world, is a negative one. People associate budget with restriction. Or tedious scrutiny of everything you do wrapped up in a boring spreadsheet. Or rules. And we know how we all feel about rules. We got into business for ourselves so we could create them, not follow them.
But budget doesn’t have to be a bad word.
00:54 The real reason for having a budget is so you k...
When you hear the word budget, do you cringe? Does it make you want to run away? It seems the typical response, especially in the creative world, is a negative one. People associate budget with restriction. Or tedious scrutiny of everything you do wrapped up in a boring spreadsheet. Or rules. And we know how we all feel about rules. We got into business for ourselves so we could create them, not follow them.
But budget doesn’t have to be a bad word.
00:54 The real reason for having a budget is so you know where your money is going and can use that information to make a game plan of what you can and should do.
01:17 When you own your business, you generally don’t know exactly how much you’ll make at any given time, so you have to do reverse budgeting.
01:59 The first step is to figure out what your minimum number (break-even) number is. Personal and business accounting software will make this easier.
03:16 It's best to have a full year’s worth of information to form a proper budget because of the monthly fluctuation. Knowing those cycles can really help.
04:33 Start with your regular expenses - your mortgage or rent, car payment or any other debts, utilities, cable, Internet, monthly subscriptions, groceries, dining out, coffee trips, entertainment, clothing, household expenses, and all that other fun stuff. What is your realistic minimum you can spend each month for the necessities?
05:29 Saving is a necessity! Your budget should include money put aside for taxes, emergencies, and retirement. I always recommend saving a percentage of your income versus a flat amount each month. This helps with that fluctuation, because you’re putting more aside when you’re busy and that will help cover you when you’re slow.
07:23 From there, you can start figuring out your tiers. So after the necessities are covered, where would you spend your money next? Pay off more of your debt and start peppering in some of those fun things you want to get or do, but don't necessarily need.
07:50 If you're not bringing in enough money, you have two options - find ways to make more, or find ways to spend less.
08:15 Consider compromises with yourself, or practice deferred gratification - giving up something now for something much better in the future.
08:49 There are so many possibilities out there. But it starts with knowing what you have, what you need, and why it matters. Budgeting is not a bad word. It’s a starting point to help you understand what you have to do to get the things you want. And when you get the things you want, you’ll wonder why the idea of organizing your money ever seemed so cringeworthy.
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