This post is a Multi-Step Approach to Creating a Budget for entrepreneurs, business owners and side-hustlers.

I recently explained the reason WHY you need a Budget for your Business and also for your Personal & Household expense tracking.

You can read that Blog Post here.

Before you start with creating a budget, download a basic budget worksheet and then follow the below steps.

You can follow this multi-step approach to ensure you gather all the documentation you require before you create your budget.

Multi-Step Approach to Creating a Budget:

1. Gather all personal financial & bank statements including:

• Bank statements
• Investment accounts
• Recent utility bills
• Credit card bills
• Receipts from the last three months
• Mortgage or auto loan statements

You want to have access to any information about your income and expenses.
One of the keys to the budget-making process is to create a monthly average.
The more information you can find and gather, the better.

2. List all your Income Sources by Calculating your total Income from all resources

How much income can you expect each month?

• If your income is in the form of a regular paycheck where taxes are automatically deducted, then using the net income (or take-home pay) amount is more accurate.
• If you are self-employed or
• have outside sources of income, such as
• child support, include these as well.

Record this total income as a monthly amount.

3. Group all your monthly expenses

Write down a list of all the expenses you expect to have during a month.

This list could include:

• Mortgage payments or rent
• Car payments
• Insurance
• Groceries
• Utilities
• Entertainment
• Personal care
• Eating out
• Childcare
• Transportation costs
• Travel
• Repairs & Maintenance
• Loans
• Savings (goals)

Use your bank statements, receipts, and credit card statements from the last three months to identify all your spending.

4. Determine your fixed monthly expenses

Fixed expenses are those mandatory expenses that you pay the same amount for each time.

Include items such as:

• Mortgage/Bond or rent payments,
• Car payments,
• Set-fee internet service,
• Utilities, and
• Regular childcare

If you pay a standard credit card payment, include that amount and any other essential spending that tends to stay the same from month to month.

If you plan to save a fixed amount or pay off a certain amount of debt each month, also include savings and debt repayment as fixed expenses.

5. Categorize all your variable monthly expenses

Variable expenses are the type that will change from month to month, such as:

• Groceries
• Fuel
• Entertainment
• Eating out
• Advertising
• Pay-as-you-go data charges
• Bank Charges/fees
• Wages
• Stationery & Printing

TIP: If you don’t have an emergency fund, include a category for “surprise expenses” that might pop up over the month and derail your budget.

6. Predict and list any unexpected expenses

Start assigning a spending value to each category, beginning with your fixed expenses.
Then, estimate how much you’ll need to spend per month on variable expenses.

If you’re not sure how much you spend in each category, review your last two or three months of credit card or bank transactions to make a rough estimate

7. Total Your Monthly Income and Expenses

If your income is higher than your expenses, you are off to a good start.
This extra money means you can put funds towards areas of your budget, such as

• retirement savings or
• paying off debt.

TIP: If you have more income than expenses,consider adopting the “50-30-20” budgeting philosophy.

In a 50-30-20 budget,”needs,” or essential expenses, should represent half of your budget, wants should make up another 30%, and savings and debt repayment should make up the final 20% of your budget.

If your expenses are more than your income, that means you are overspending and need to make some changes.

8. Make Adjustments to Expenses

If you’re in a situation where expenses are higher than income, find areas in your variable expenses you can cut.

Look for places you can reduce your spending—like

• eating out less or
• eliminate a category
• like canceling certain memberships

If your expenses are far above your income, or you have significant debt, reducing your variable expenses may not be enough. You may need to trim your fixed expenses and increase your income to balance your budget.

Aim to have your income and expense columns to be equal.
This equal balance means all of your income is accounted for and budgeted toward a specific expense or savings goal.

9. Budgeting Tips

Once you have set up a basic budget, customize it according to your financial situation and profit goals.

Working on commission, you should be aggressive in saving to help cover periods when the market is slow.

When you have cash flow issues because you are paid only once a month, divide that payment by weeks, and keep the cash you planned to spend in the remaining weeks in a separate account until you need it.

Pay with a credit card only if you will be able to pay it off at the end of the month. Otherwise, you will owe interest on top of the price of whatever you bought.

Adjust your budget monthly if you find you overestimated or underestimated your expenses.

Keep an eye on large expenses that only occur every few months, such as repairs-&-maintenance payments.

If you tend to overspend in certain categories, use budgeting hacks such as switching to a cash-only budget.

Once your expenses are lower than your income, budget towards savings goals before you increase your spending. Take time to learn other financial management skills to improve your financial literacy and make your money work harder for you.

I share more about creating a business budget or financial freedom checkpoints inside my business membership. You are welcome to join my business membership, the B.O.S.S Society, where I teach all the ways you can start a successful online business, implement effective income strategies and learn how to build profitable funnels.

I also created a 6-Step Framework to help you create a game plan for your business.

See you online!

Basic budgeting tips can help entrepreneurs to set their business up for success.

Budgets and a sound money mindset not only contributes to the success of a business but also gives power back into the hands of business owners.

Knowing your numbers and being able to predict your profits brings clarity, control and confidence. It enables us to make better informed decisions and empowers us to reach our profit goals.

Good money habits starts with the basics of managing your finances.

Take note of these 5 Money Habits to help you start right now:

Part of the foundational knowledge every entrepreneur should have is to know how to BUDGET and to PREDICTING profits.

Fortunately, as an Accountant and Business Building Strategist, this comes naturally for me. Even since I was in high-school, I grasped the importance of managing money.

I know it all started with my mothers’ influence…

My mother was our finance minister in the house.

She taught me the value of money and how to budget for real-life expenses, not intentionally though.
Yes, I did learn money matters, financial strategies, and cash flow forecasting in order to graduate, but nothing replaces the actual real-life experiences we encounter when our cash no longer covers all our expenses.

After my parents’ divorce, I moved into a 2 bedroom flat with my mom.

She barely survived and struggled to provide for herself let alone for a teenager who had to eat more than she sleeps…

Soon I realized that my mother is in much despair and finances was really tight.
Her simple principle is still today very fresh in my memory, so much so, that I am able to teach her principles to my children as well!

• She sat me down,
• took a piece of paper and a pencil, and
• summarised all her income on one side and all her expenses on the other side.
  She then asked me to match the expenses with her income

Soon I discovered the total amount of expenses far exceeded her income.
She then asked me to decide which expenses are the most important…
With only a small amount left to buy groceries, she then took me to the grocery store and into each food aisle, she explained, in lament terms, how much an item really costs.

Determining the weight of a product, the size, the amount, and then the price per weight/size/amount truly revealed if an item that is “marked down” or on “sale” is actually more expensive or if it is genuinely a bargain.

Because in general, we miss looking at these basic indicators and are influenced by the emotional manipulation of marketing tactics.

I never knew I could learn so much from a grocery-store aisle!

I still practice this principle today when buying my groceries

With her simple approach, I was fascinated and I had a desire to understand how money can be managed better, so I could get more out of it.

I grew up with a scarcity mindset and because of many money mindset issues, I mismanaged money in my young adult years. Soon after earning my own income, I fell into terrible debt traps, and also made silly buying decisions because of impulsive behaviors due to emotional needs. Most of all, because I never really took the time to look at my facts.

I made many mistakes, and I probably still make them, but I also came very far.

In the past 10 yeas, I learned better ways and the importance of practicing better money habits.

I want to help entrepreneurs not to make the same mistakes I made.

So, let’s look at basic budgeting tips to help you live a life of freedom.

NOTE: Basic Budgeting Tips for entrepreneurs starts by drafting a detailed budget.

Drafting a Budget could also bring lots of emotions to the table, like

• Fear,
• anxiety and
• guilt

are the most common emotions some entrepreneurs and business owners also struggle with is

• selfishness,
• greed, and
• a need for better, more…

Having all these emotions can really make you want to hide away from facing your facts.

A scarcity mindset won’t help you either! Avoiding something as important as your finances is not only an avenue down to disaster but also causes all these emotions to escalate into further traps.

Eventually, we all come to a point where we just have to face our giants, conquer our fears, and take the unspoken risks.

Talking about money is never easy.

Planning to have more money is much easier than taking the action to do it.

I have learned more through my own real-life experiences, mistakes, failures, and fears than any MBA course can ever teach me.

Hopefully, I can help you also to UNDERSTAND

• HOW
• WHY and
• WHEN

you need a budget so you too can find peace & clarity in managing your finances.

Here are some tips and guidelines to help you get started:

Budgeting Basics

A budget is an action plan to really UNDERSTANDING

• how much money you have,
• where it goes, and
• planning on how to spend and save it best

A budget is not only for people who struggle with their day-to-day financial planning, even if your finances are in good order, you still require a budget.

A good budget keeps track of

• your habits,
• spending tendencies,
• reveal your priorities,
• reveal hidden cash flow problems, and
• might even free up some money you can allocate to reaching your goals

Create a Budget

The most difficult part of a budget is to START creating one.
It is similar to exposing yourself and revealing your vulnerabilities.

A basic worksheet can help you organize everything.
This basic budget worksheet has the most common categories and can really help you track your

• expenses,
• income, and
• profit

in an orderly fashion.

Follow a Budget

You can master the setup of a good budget but the key to real success is in actually FOLLOWING it!

I had to force myself into creating a habit of updating my budget weekly, today I do it daily and some days I can’t even remember I did it.

Good habits bring good results.

By taking a multi-step approach and doing things in the right order can assist in achieving great results.

Overspending can easily be the death-trap of your budget.

In an age where everything is easily accessible simply by a swipe, scan, or tap, we all fall short in keeping track of the amounts we spend against our fixed amounts budgeted.

Specials and Sales are my worst temptations and I had to learn how to change my mindset about falling for these marketing strategies because this is all it is, strategies!

It is seldom that I can find a special that was a real special [in value] or an item on sale that I could not find elsewhere for the same price or even cheaper…

Keep your eyes open and your wallet closed!

BEFORE YOU BUDGET:

Believe in the process!
Know that you are never too poor to budget!
Decide what your goal is with your budget!

HERE IS A MULTI-STEP APPROACH TO HELP START A BASIC BUDGET FOR ENTREPRENEURS:

#1 Setup your Budget

1. Decide on the sacrifices you will make in order to reach your profit goals
2. Make a list of your expected expenses (fixed ones)
3. Categorize your Adhoc expected expenses (annual/periodical)
4. List unexpected expenses but which occurred during the past 12 months
5. Gather all your income (fixed, Adhoc & projected (bonus/increases/commissions)
6. Include the profit goals you want to reach
7. Remember to add a savings habit – automation can help with this as we sometimes forget to save a % of our Income

#TIP: Use a basic spreadsheet/worksheet to start and adjust it as you get more comfortable with your budget

#2 Track your Budget

This is the difficult part – the part where most people fail…
It is time-consuming and sometimes disappointing to

• track daily transactions,
• allocate them to the correct categories, and
• then compare them to your budgeted amounts

Fortunately, there are several apps, software packages, etc that can assist with these processes automatically.

I recommend these apps for quick, user-friendly budgets:

1. Mint – created by Intuit, the same Company that created QuickBooks
2. Pocketguard – easy, control and save automatically
3. YNAB – You Need A Budget – a hip and culturally current app

The most important is to ensure your expenses never exceed your income!

#TIP: Try to review your budget daily for at least 21 days – this will soon become your next good money habit.

#3 Evaluate your Budget

After your first month, you need to

• evaluate/compare your budget – your budgeted amounts with actual figures
• Identify your budget weaknesses and where you went wrong in under-budgeting or overspending
• Make the necessary adjustments for the next period

#TIP: From this first month forward try to cut a % of your expenses so it can be allocated to reaching your profit goals.

#4 Set your Goals

Just as you review your budget, you need to constantly review your profit & growth goals.
By allocating a % of spending to goal-reaching, you soon will master this savings habit and then you can aim to set higher goals.

#TIP: Your savings habits will contribute to reaching your profit goals realistically

 -Remember-

*ONE STEP AT A TIME*

the key to creating & keeping good habits!

A sound financial plan, budget or profit predictions can help you determine your next goals.

Setting up a Tax-Free Savings Account can assist with reaching your goals such as investing for your child’s education, that second honeymoon, or even your next adventure.

Keep moving forward,

even if it feels and looks very slow…

keep your eyes focused on your end goals

#5 Cut your Spending

I know, everyone tells you this, you read it probably all the time, but you ignore it.
This is and was my greatest obstacle in following my budget.

#TIP: Instant gratification makes it a lot more difficult today to cut on spending, especially lately where everything is available online – so limit your access to online payment methods and when you go out shopping, keep only one card with a limit in line with your spending budget

Find some of the tips that help me to ensure I make better spending choices:

• Shop around
• Compare prices with similar retailers and suppliers
• Determine, before you spend, if the spending is
  • a necessity or
  • a desire and
  • for how long you can actually go without buying it
• Review your monthly fixed expenses such as
  • insurances,
  • service fees, and
  • subscriptions at least annually
• Practice an attitude of gratitude before making any buying decision
• Look out for retailers that offer
  • loyalty cards,
  • cashback, and
  • rewards, these are fantastic ways to get money back into your pocket

As an entrepreneur or business owner, you should know the importance of knowing your numbers.

Hopefully these basic budgeting tips brought some insights to help you get your business budget on track for growth and reaching profit goals realistically.

If you are ready to learn more about predicting your future profits by using financial strategies, you are invited to JOIN my business membership, the B.O.S.S Society, where I teach all the ways you can start a successful online business, implement effective income strategies and learn how to build profitable funnels.

I also created a 6-Step Framework to help you create a game plan for your business.

See you online!