1. It helps you keep your eye on the prize
A budget helps you figure out your long-term goals and work towards them.
If you just drift aimlessly through the next financial year, tossing your money at every pretty, shiny object that happens to catch your eye, how will you ever have enough surplus funds to tackle an emergency situation or that elusive but deserved holiday?
A budget forces you to map out your goals, save your money, keep track of progress and make your dreams a reality. It also helps solvency.
2. It ensures you don’t spend money that your business doesn’t have
Far too many businesses spend money they don’t have -and we can owe it all to credit cards. Before the age of plastic, people knew if they were living within their means.
At the end of the month, if they had enough money left to pay the bills and sock some away in savings, they were on track. These days, people who overuse and abuse credit cards don’t always realise they’re overspending until they’re drowning in debt.
However, if you create and stick to a budget, you’ll never find yourself in this precarious position.
You’ll know exactly how much money is coming in and out, how much you can afford to spend each month and how much you need to save.
Sure, crunching numbers and keeping track of a budget isn’t nearly as much fun as going on a shameless shopping spree with the MasterCard.
But look at it this way: when your spend-happy friends are making an appointment with a debt counsellor this time next year, you’ll be jetting off for that European adventure you’ve been saving for – or better yet, moving into your new home.
3. It leads to a happy treatment
Let’s say you spend your money responsibly, follow your budget to a “T” and never carry credit card debt.
Good for you! But aren’t you forgetting something? As important as it is to spend your money wisely today, it’s also critical to save for your future.
A budget can help you do just that. It’s important to build investment contributions into your budget.
4. It helps you prepare for emergencies
Life is filled with unexpected surprises, some better than others. When you get laid off, become sick or injured, go through a divorce or have a death in the family, it can lead to some serious financial turmoil.
Of course, it seems like these emergencies always arise at the worst possible time – when you’re already strapped for cash.
This is exactly why everyone needs an emergency fund.
The budget should include an emergency funds that consists of at least three to six months worth of running costs and expenses.
This extra money will ensure that your business don’t spiral into the depths of debt.
5. It sheds light on bad spending habits
Building a budget forces you to take a close look at the what your business spends its money on.
You may notice that there is spending money on things that your business doesn’t need.
Do you honestly need to spend $20,000 on telephone expenses?
6. It’s better than counting sheep
Following a budget will also help you sleep better.
How many nights have you tossed and turned worrying about how your business is going to pay the bills?
People who lose sleep over financial issues are allowing their money to control them. Take back the control.
When you budget your money wisely, you’ll never lose sleep over financial issues again.
7. It separates your business from personal spending
Businesses can have a hard time with this separation issue. But budgeting well for business setups up a personal budget that is achievable.
WITH A NEW FINANCIAL YEAR APPROACHING – Consider completing a budget as a way of saving your financial life.
Talk to CTBS or your accountant for assistance.