Financial Planning for Success
The way I put together my budget plans weekly are two-fold. One for the business and one for my personal life.
For a very long time in my I was a student. I switched degrees halfway through my original career choice and then took an extra year in school to update my portfolio so for the better part of my life after high school I was studying in one way or another. While this was amazing for my personal and professional growth it was, as you can imagine, quite destructive for my financial state.
Because I always carried the mentality of a student, I never really trained myself proper budgeting and financial responsibility. And unlike for a lot of other people, my parents were not exactly good role models for proper savings growing up. Having immigrated when I was quite young then immigrating again when I was thirteen, when it came to financial stability I can only really remember my parents trying to make ends meet. In my mind, living paycheck to paycheck was just part of life.
It wasn’t until a few years after school that I realized how closely tied my finances were to my own success. Both in my career and personal life. The more stable I was in my finances, the more I can plan ahead. With that planning I was able to not only create a mentality where I no longer worried about bills and spending but also secured a financially stable business. Unlike my earlier endeavors, my business runs only on cash flow that it itself generates. Meaning my budgeting for my personal life is kept entirely separate from that of my business. Which is a huge step for a small business to take!
The way I put together my budget plans weekly are two-fold. One for the business and one for my personal life. In order to do this properly, I fine tooth comb through all of my expenses weekly then calculate what I spent in each sector of life down to the penny. At the moment my sections of calculating are as follows:
1. Food and drink
5. House and home
6. Planner supplies
7. Office expenses
8. Shop expenses
Once I calculate what I spent in each area for the month I can see where the top spends are and trigger spending areas. Trigger spending areas are those where I spent the most money for the month without seeing results. For example, if I spent $1500 on shop expenses that month but did not make that up in profit after paying out all payroll and expenses. Every month I pick 4 trigger spending areas to work on in the month ahead. I take a look at what I spent in those areas and estimate a realistic budget on lowering that spend. I then divide that budget by 4 weeks. Within each week I try to stick to the budget I had allocated and if I go over it, that amount rolls over and gets subtracted from the budget for next week. If say I gave myself a $100 budget for eating out each week and this week I spent $150 for a friend’s birthday dinner, I better start packing some lunches next week because I will only have $50 to spend.
When allocated budgets, you need to make sure that you account for a certain amount to be deposited into your savings accounts. Currently I have a long-term savings account, a short-term savings account, and a business savings account plus a business tax account. Having all of these separate is quite useful since I can put a lock on the long-term account, delegate a certain amount to be put into personal savings and detract the proper amount for taxes from each business deposit.
It took me some time to get my financials to be stable and I won’t lie, I’m still struggling here and there when it comes to sticking to budgets but I am a million years further in my future success than I was a decade ago and I only have proper financial planning to thank for that.
If you have any questions or need some helping setting up your own budgeting system, feel free to email me and we can work together to help you achieve that success!