How To Make A Budget In 3 Easy Steps

Planning a major event, vacation or making a major purchase takes a lot of planning. And so does creating a new product or service or starting a major project. And the first thing people do for each of these tasks is create a budget, right? So why is it that when it's time to start a business you don't create a budget??

Budgeting and accounting are necessary evils. No matter what - they have to be done. And no one wants to do it. People dread it as if it is the black plague. But you must perform these tasks regularly in order to manage you business finances.

So I am going to share with you three simple steps to create and maintain a budget. These steps can be done by anyone for any one of the major activities I mentioned above. And I am giving them to you because I don't want you to have ANY excuse as to why you didn't create a budget.

So here goes...

1. Determine your monthly income. Most business owners, well people in general, budget for expenses. No one ever thinks about the revenue. In order to have a complete budget you have to factor in the revenues and the expenses. Think about it - if you only budget for the expenses you are already at a loss. Never thought about it that way before have you? So figure out how much income you want to earn per month and then multiply it by twelve to determine the total for the year. I also suggest adding 5% - 10% cushion to cover unexpected expenses that may not be accounted for.

2. List ALL of your monthly expenses. There are so many costs built into a budget. And often times people budget for the big items but not the little incidentals. And it is those little items that can cause you to blow your budget. So don't forget about the little expenses, such as office supplies, internet fees, and even parking. List them ALL by month and then multiply those figures by twelve to determine your total spend for the year. Now if you notice that this fee is close to or higher than your revenues then you need to do one of two things:

a. Revisit step one and update your revenue or

b. Go through your expenses and make sure all of the costs are reasonable. You may need to push some items to succeeding years or find new vendors with lower costs..

3. Track it. Whether you maintain this budget within your accounting package or in an excel model, it doesn't matter just track it somewhere. Don't create a budget and then try to manage it in your head. It won't work. You can't remember it all. Input your actual figures monthly or weekly, depending on the project, and compare your actual figures against your budget. This will help you monitor your spending and better manage your cash flow. It's a simple process that can take as little as five minutes. This process will help you keep a handle on not just the items budgeted but also those incidental items that you didn't budget for. Again, these expenses are what can blow your entire plan and if you don't know they are there you can't take a recourse action.

Money Saving Tips in 2013

Make a shopping list

Food shopping forms a significant part of our monthly outgoings and the supermarket is where the bulk of the money is spent. Tesco takes £1 in every £8 spent by UK shoppers. But be warned, stores spend a small fortune studying ways of making us part with more of our money than we would otherwise intend to. Have you ever wondered why your favourite song is playing in the background as you navigate the aisles? Have you even noticed the background music? Possibly not, but you will have noticed at the checkout that the bill is often more than expected. To circumvent this, simply make a shopping list. Dig out the cookery books, plan a few meals and only buy what you need.

Shop online

The internet is gradually taking over. Online grocery shopping is getting better all the time and there are plenty of comparison websites to help find the best prices for bigger items. Give it a try, unless of course you like fighting your way through supermarket crowds.

Consider own-brand goods

You can buy a tin of Asda own-brand baked beans for 14p and a loaf bread at Asda, Tesco or Sainsbury's for 19p. Enough said.

Sell your clutter on eBay

Take this quick test: You're at home. Open a cupboard. Look inside. If it's full of clothes you haven't worn, or 'good ideas a the time' you haven't used, for, let's say, three years - you don't need them. So why not sell them to someone else who does? eBay, the online auction house, has opened individual sellers to a world of buyers. And you can flog anything for the cost of a small commission. Tip: you may want to buy a few items first to build up your rating as a respectable eBayer before you start selling.

Ask yourself: do I really need this?

Imagine the scenario. It's lunchtime and you've got an hour to kill. You find yourself in a department store and there's a sale on. You pick up a beautifully packaged selection of barbecue tools and associated garden paraphernalia. And it's half price. Now, stop! Ask yourself: Do I really need this? Exactly. Now, put it down and walk away.

Cancel your gym membership

Recent figures show that 77% of UK adults sign up for Gym memberships then fail to attend, with the average person wasting £303 per year totalling a massive £37 million waste by consumers on Gym memberships. If you are one of these statistics, cancel your membership immediately and look at alternative ways to improve your fitness, such as walking or cycling to work.

Do you need all those TV channels?

Britain is switching to digital-only television and time is running out for you to choose your new digital TV provider. The choice is already bewildering and with telephone-based services now being launched it's going to get more complicated. Packages range from full the monty, including every sports and movie channel costing around £50 a month, down to Freeview, which is free

Is It Costing You More To Go To Work?

No matter how long our work week is, we always look forward to pay-day. However, is it costing you more to go to work? Sound rather strange and it is ironic that we work to earn money but some have not really put pen to paper to see the exact revenue against our expenditures. Some say "A dollar in is better than a dollar out" and they will do anything to classify themselves as being employed. We will look at various factors to see if we are actually losing more than we are gaining.

Cost Of Child Care

Some people who have children employ, nannies, caregivers and babysitters and the cost of such services is strenuous to our pockets. Nevertheless, it is necessary, as we can't leave the kids by themselves. If we were working from home we would have saved the extra expense.

Eating Out

Some persons work long hours and they will have to either take a sandwich to work or eat out during work hours. This is also an additional cost borne on the pocket that might not be taken in consideration. If you were operating from home, maybe it would have been easier to eat leftovers or skip lunch until dinner time. Psychologically, most person might abstain from eating frequently when they are at home as opposed to being somewhere else. It is not safe to take cooked food in your bag the entire day unless you have a refrigerator at work to store the food. Some individuals do not have the privilege of storing meals and therefore have to purchase fresh food during breaks. Whichever way we choose to eat, it affects our budget.

Cost Of Transportation

This is expense is mandatory if you are not working from home. Some persons drive to work while others commute by train, ferry, taxi or bus. It would be wise to probably find employment in reasonable proximity to home to limit transportation cost.

Stress Factor

This is the most critical factor in determining whether it is worth working for your current employer. Some workers are victims of psychological and emotional abuse at the work-place. There is also physical pressure when some have to double-up due to frequent staff shortage. This becomes unbearable over long period of time when the boss is reluctant to fill the vacant post.

Consequently, employees spend hundreds of dollars on stress medication and hospitality bill as a result of work pressure. High blood pressure or hypertension is the order of the day.and one considers whether it is worthwhile staying home instead. Suppression from higher authorities can also add to your dilemma at work.

Cost Of Credit

If you are basically living from pay check to pay check, you might find yourself buying things on credit until pay-day. This incur charges if you don't pay off your balance before your next credit card bill cycle.

Think Smart

If you are paying out $100 and earning $60, then obviously you are living above your means. If you are living in deficit, you might want to find a job that pays over $100 or stay home and manage your own home business.This can be a tedious route as well but you are able to manage your kids and work at the same time. You could be saving hundreds of dollars per month by cutting significantly on:

    Cost of Child-Care
    Food
    Transportation and possibly stress

Finding a job that pays more is also another option to consider. but it would be remiss of me to over-look these factors:

    New Challenges to confront
    Working in unfavorable conditions just for the pay
    Lack of flexible or extra time for your family
    If you are a female and thinking of extending your family, you are not entitled to any maternity benefit until you are qualified

These might be few factors to be aware of before leaving your current employer. The bible says "By the sweat of our brows we shall eat bread" but some are actually eating water crackers while they work, because of limited resources. Work is honorable and good but if it is at a higher cost, you might want to weigh other options.

A Budget Item You Can Stick To

Budgets never deliver the results. Have you actually discovered your self, or anyone else saying that in the past?

I think that budgets unquestionably work. The main problem is that most people do not work at keeping with tips on budgeting. The principle of a budget is incredibly simple, and to claim that it does not work is simply ridiculous.

Budgeting and financial planning are the cornerstones of responsible money management. Not only that, but they are vital in developing a workable plan for the future, and can even reduce stress.

While many people shy away from the accountability and responsibility required to create and maintain an accurate budget, buckling down and building a budget can ultimately help reduce stress and worry, and lead to a more pleasant and fulfilling life.

It is normal to find ourselves asking, HOW TO START A BUDGET? Making a suitable budget and sticking to it will come naturally to you in no time. Also, it is not uncommon for many people to need assistance in planning for a budget. Many people who earn a good income often get complacent and neglect the importance of budgeting, but in my opinion, having more money makes it even more necessary to have a fixed plan on how best to spend and save it.

Financial problems are some of the most common causes for stress and frustration. If you have had problems with your finances, it is time to take action. You can begin the process of resolving your financial woes by beginning to make a budget. Many people don't use a budget but once you begin to use one, you'll have a much better idea of where your money is going.

It is important, no matter how much you make, to manage your finances wisely. An important tool in personal financial management is the budget. Although the concept can be intimidating, a budget is nothing more than a monetary breakdown of income vs. expenditures. There are many logical reasons for creating and following a budget, such as planning for unexpected expenses or the loss of a job, saving for your retirement or your children's education, and getting out of debt.

You say you know where your money goes and don't need it all written down to keep up with it? I issue you this challenge. Keep track of every cent you spend for one month and I do mean every cent. You will be shocked at what the itty-bitty expenses add up to.

Food Storage - Beyond the Emergency Fund

Having an emergency fund is critical to successfully sticking to a budget. When used only for emergencies, the fund will go a long way to keeping you from needing to use debt to see your way through unexpected financial situations.

I also believe in being prepared to sustain yourself and your family in the event of economic trouble, disasters, etc. I'm not a guy who thinks the world will end next week. I do think however, that it's our duty in a society that values individualism and freedom to be prepared and not be a burden on others if we can help it.

In my mind, this is the fundamental principle behind saving and having an emergency fund. To supplement your emergency fund, one idea is to start to stock up on things you would need in the event that you or your spouse lost their income through layoff or disability. I'm not advocating this as a replacement for disability insurance. Insurance is an important part of the budgeting process when you are able, but I think every little bit you can save will help.

Stocking up on household items you will use anyway is a relatively easy way to save for an emergency. I'm also not recommending you stock up on things to the point where you need to take over the garage with your stock. Things go bad and become hard to manage when you do that not to mention that it can be expensive. Couponing can help but that's another topic. Here are a few categories of things we like to stock up on:

Hygiene

Personal hygiene is important for health and also if you lose your job and need to find another one! We stock a couple extra of these types of items to allow our family to not have to purchase anything in this category for at least a month or longer if needed. This is dependent on the item of course. Items we stock are toothpaste, floss, soap, shampoo, extra tooth brushes, hair product, women's personal items, and even toilet paper although that can be bulky and hard to find an out of the way spot to store it.

First Aid

First aid items tend to not be used as often so it doesn't take long to get a stock of items. We purchase extra band aids, pain medications, a month extra of allergy meds (over the counter), iodine, triple antibiotic ointment, hydrogen peroxide, and rubbing alcohol.

Cleaning

Cleaning items are important too but maybe not something you would normally stock up on. We are pretty light on this item but we do have extra dish washing detergent and cloths washing soap. That's pretty much it for that category.

Food

This is a category that can be expensive and also hard to find room to store. My approach has been to buy a couple extra items when we go to the store for things that last a long time and also that we would use up as a normal part of living.

You could buy freeze dried or dehydrated food but in my opinion these are expensive. If you have the extra money and want to do it, go for it. We do have some but we also use it for camping trips so I could justify having a little bit around.

Items we buy typically are canned goods and dried pastas and grains. Our family uses canned ham, chicken and tuna for many dishes so keeping a stock of those items is easy to do and in an emergency, a stockpile of protein.

We also purchase canned vegetables, soups, powdered milk, flour, rice, dried beans, peanut butter, pastas and grits.

Grits are great to use to stretch how far a few eggs go.

As an experiment, I bought a can of crystalized (freeze dried) and a can of powdered eggs (dehydrated). If you can afford it and want to store eggs, crystalized are the way to go. They taste much better than powdered.

Frozen food is another thing you can stock but unless you have a big freezer, it can be tough. We do stock frozen meat (mostly beef, chicken and fish) but that's about it.

Rotating

The last part of this is rotating stock. If you don't do this or keep an eye on it, you'll end up with out of date product and it will end up costing more than it's worth. I've found it to be pretty easy, you just have to do it when you bring home your groceries.

It doesn't take long to develop a food stock that could last you for 3 months. It doesn't take too much room for that amount either. If you have a family of four and have three month's worth of food, that would significantly reduce the amount you need to have as income if someone in your family loses their job.

You can also use it to help others who may be in need. If a friend, neighbor or extended family member falls upon hard times, you just may be the person who can really make a difference to them.