A Budget Underpins Financial Certainty

I am not going to lie; I love to spend. 

Over the years, I have found it hard to resist the temptation of buying the things I want when I want.  This includes things for my business (like the newest Mac release), as well as personal items (if you don’t know me, I like to ride, and so bikes are my thing).  This has caused me some problems.  Some months I have almost fallen over when the credit card statement has arrived. 

I don’t think I am alone in this.  In fact, I know its common.  Being an accountant in public practice and dealing with clients in small businesses I see it all the time.  Yes, one might question if personally, I should know better. But we are all human.

The financial pressure of unrestrained spending can range from mild inconvenience to a massive problem.  So how can you buy without a headache?  First things first, everyone, whether they are in business or for their personal spending, should have a budget in place. Yes, the dreaded B word!  

Budgets are to give you confidence that your income can accommodate all the necessary costs of life, plus the appropriate level of discretionary ‘fun things’ that make all the hard work worthwhile – also called your living expenses.  If your income doesn’t accommodate your living expense, you have a very clear framework that allows you to address this.

So, what can a budget do for you?  It gives you the certainty of knowing if your financial capacity to spend on discretionary items at any time.  Budgets are also a tool that helps bring discipline and will minimise the shock when your credit card statement arrives at the end of the month. 

A budget should be:

  • Detailed
  • It should allow for some discretionary (aka fun) items
  • It should take into accounts the costs of living.

Most importantly, a budget needs to be realistic.  There is no point in putting a budget together for your business (or your personal life) if there is no chance of achieving it.

Talk to your accountant  about helping you to set and monitor a budget.  It is the first step to understanding your financial position.  It will also give you certainty in your capacity to afford the things your business needs. It will give you the ability to make smart financial decisions.