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money managing, budget

Hate budgeting? Key money managing habits to thrive in business and life 

Budgeting, budgeting, budgeting! We’ve all heard about the importance of budgeting before, but many still overlook this crucial money managing practice when it comes to their personal and business finances. 

money managing, budget

Key money managing habits to make your personal and business finances thrive. (Photo by Karolina Grabowska from Pexels)

Budgeting can look different depending on the area of focus. Your personal household budget vs your business budget will prioritize different things. However, at the core, there are also many similarities and the mechanics are the same. 

When you create a budget, you are planning your incoming and outgoing expenses. This core practice is the same for both personal and business budgets. 

Businesses and households that thrive know how to manage their money and keep their expenses in check. By implementing these money managing strategies into your life, you too can thrive and prosper in both business and life. 

Creating a personal spending plan

Often, budgeting begins in response to a financial crisis, however, ideally, budgeting is proactive, not reactive. Instead of being about damage control, it can be about monthly progress and strategic financial planning. 

By creating a personal budget, you and your household can better plan your spending and save for future emergencies or unexpected expenses. 

Budgeting also includes planning for major purchases. By creating a plan for purchasing big-ticket items, there is less potential for financial surprise and unexpected costs down the line. 

Entrepreneur, international speaker, best-selling author, licensed CPA, and a Chartered Global Management Accountant, Sharon Lechter shares key budgeting tips on her blog. Below are her tips to establish a solid personal budget, or as she prefers to call it– a personal spending plan. 

A personal budget should include the following steps

    • Establish your objectives (financial, lifestyle, etc.)
    • List all of your income sources (wages, investments, spousal support etc.)
    • Identify and list all expense categories (housing, auto, groceries, etc), broken into fixed vs. variable
    • Assign amounts to each spending category
    • Allocate savings
    • Account for fluctuations or one-time events
    • Track your progress and make adjustments if necessary

Managing your business budget

Business budgeting follows the same basic principles as personal budgeting, with a few additions. An accurate business budget will help you ensure your business has enough revenue to stay in business and continue to grow, while also giving you an in-depth window into how the business is performing and what to anticipate in the future.

money managing, budgeting, personal and business finances

Photo by Tima Miroshnichenko from Pexels.

Again, Sharon shares her expertise, laying out the core components to include in a basic business budget

Your business budget should include the following:

    • Your sales and revenue
    • Fixed costs (such as rent) and variable costs (raw materials that vary in price)
    • Debt service
    • Account for fluctuations or one-time events
    • Track your progress and make adjustments if necessary

One major difference between business and personal budgets is that in a business budget, forecasting is more crucial. For most people, predicting one’s monthly income is usually simple as income is fairly consistent from month to month. However, in a business, one must pay closer attention to their revenue forecast to plan for the months ahead. 

In a previous post on Latinas in Business, financial service and leadership expert Jesse Torres advised that business owners should sit down to thoughtfully estimate expected cash inflows and outflows. 

“Factors that to consider include the sales cycle, terms and discounts provided to customers, industry delinquency rates, and other factors that may affect the timing of incoming cash.

Similarly, it is necessary to estimate expenses and other cash outlays. This includes the timing of the purchase of equipment, raw materials, and supplies. It also includes the schedule for payment of salaries, taxes, and other day-to-day expenses.”

Business owners can utilize financial resources from SCORE, a national nonprofit support group for small business owners. SCORE provides a free budget template that business owners can use to manage their cash flow.

You might be interested: Financial matters are women reluctant to talk about money?

Budgeting for Unexpected Costs

One area where budgeting really pays off is when you are faced with sudden, unexpected costs. Most of the time, even without budgeting, we tend to know what costs to expect month to month in both our personal and business finances. You know you need to cover your rent, gas, utilities for instance and probably have that money set aside. However, will you be prepared for an unexpected expense such as a car repair? 

The SCORE blog offers budgeting resources to anticipate these unexpected costs and allows you to set aside funds to tackle these challenges when they arise. Marketing Content Manager, Lauryn Johnson breaks down the differences for anticipating unexpected costs for both personal and business budgets: 

At home: Those who are prepared will have sudden expenses covered by a portion of their budget, usually money set aside specifically for “incidentals.” Others may cover these expenses with their “rainy-day” fund. Either way, those who budget and save will be more likely to successfully navigate an unexpected expense without going into debt. The less prepared may end up having to charge the unexpected expense on credit cards, loans, or other high risk methods. 

In business: For most business situations, costs should be considered either fixed or variable. Much like your regularly budgeted personal expenses, fixed costs have to be paid regardless of your profitability each month. Variable costs, however, are where you should have a little more flexibility.

Implementing these budgeting money managing practices in both personal and business finances will help you thrive and prosper in all avenues of life. 

finances, savings, budgeting

Tips to improve your financial smarts this National Financial Literacy Month 

April is National Financial Literacy Month and what better way to celebrate than to take this opportunity to review and upgrade your financial smarts.

What is Financial Literacy Month and why is it important? 

Whether you’re just starting out or have been earning your way for quite some time, it’s never too late to learn about saving and improving your financial outlook. Developing a budget and building financial knowledge is the foundation for a brighter future.

Learning about financial literacy is not only for adults either. National Financial Literacy Month places the importance of learning about finances and the tools to learn about them right in the classroom, too. No matter their age, putting the know-how and resources at children’s fingertips will give them the power to make smart decisions now and in the future.

What began with The National Endowment for Financial Education as Youth Financial Literacy Day in 2000 has evolved into a month-long observance supported by the Jump$tart Coalition called National Financial Literacy Month. Both the House and Senate have fully supported National Financial Literacy Month through joint resolutions and the U.S. Department of Education promotes the observance of the month as well. Most recently, President Joe Biden proclaimed April National Financial Capability Month and called upon all Americans to observe the month by understanding barriers to financial well-being, and taking action to build their own financial capability and assist others to do so as well.

You might be interested: Financial matters are women reluctant to talk about money?

finances, budgeting,

Photo by StellrWeb on Unsplash

Tips to improve your financial literacy

  1. Read and inform yourself as much as you can

As the old saying goes, knowledge is power. If you want to take control of you financial literacy the best place to start is at the beginning by hitting the books. Start reading newspapers or magazines that focus on money matters. Check out books and guides for beginners. Financial literacy is a skill, and like any skill it takes time to learn. Treat it like a school subject or a new hobby you want to master and absorb all the knowledge you can about finances and money matters. 

  1. Make a budget and record your spending

If you want to be savvy with money budgeting is key. Having a set budget will help you estimate the amount of income and expenses for a given amount of time. There are many different kinds of budgets so you may have a weekly budget, monthly, or yearly. You could even have all three! Having a budget will help you keep track of your money and expenses and prevent overspending. 

Additionally, to take this a step further, you can record your spending. Get yourself a nice little notebook or make yourself a spreadsheet and use it to keep track of all your outgoing money. Tracking how much you spend and on what will help you identify areas where you may be overspending such as takeout food or online shopping. Once you know your spending habits, you can then make efforts to improve them. 

  1. Develop a savings strategy

After learning your spending habits, you can now start curating a saving strategy that will work best for you and your lifestyle. Having savings is incredibly important, as we have all learned over the past year, because you never know when an emergency or disaster may strike. Since the pandemic hit, thousands have lost jobs and seen huge changes in their financial situations. By creating a set savings strategy you can help ensure that you will always have something to fall back on. 

Use your newfound budgeting skills to create savings funds such as an emergency fund, a fund for a certain goal, or even retirement. After reviewing your fixed expenses in your budget, decide on an amount that you can set aside each month to go toward your savings fund. Once you put it in your savings, forget about it! Over time you’ll be able to accumulate a solid savings fund for your future.

  1. Utilize financial management tools

If you need help getting started with managing your finances, financial management tools are a great addition. There is a wide variety of both free and paid tools in the marketplace that can help you manage your credit cards, checking accounts, savings accounts, and more. Take some time to research different management tools and find one that works for you and your unique needs.

  1. Ask advice from others or talk to a professional 

If you’re feeling overwhelmed about money, seek out the wisdom of others who have already mastered the art of financial literacy. A trusted family member or friend is a great place to start. You can also speak with a financial advisor, whose job it is to help you manage your money safely. An advisor can help you create a financial plan and guide you through many of the steps toward building financial literacy.