#2: DON'T FUDGE IT, JUST BUDGET

Do you cringe when you think about budgeting? Do you avoid numbers and budgeting in your personal life and your business? Are you feeling a little fuzzy about how to set up a budget and why you even need one in the first place? Then you are in the right place! 

I’ll break down why it benefits you to set up a budget and give you some useful and actionable tips to create your own personal and business budget. My goal is to also shift your mindset when it comes to how you think about budgeting. It takes practice to get used to creating and using one, but you are capable of building your budgeting muscles and using a budget to navigate you to your goals!

Be sure to check out my YouTube tutorial video on setting up a personal and business budget using EveryDollar. This is the free budgeting tool that I recommend using which I’ll link below in addition to the link to my YouTube channel.

www.youtube.com/@financiallyadjusted

https://www.ramseysolutions.com/ramseyplus/everydollar

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I also have a free checklist for new entrepreneurs who are just getting started with their small business. Also, tune into my first podcast episode about starting smart in business. It breaks down the 5 Key Decisions/Actions that new entrepreneurs need to think about.
https://www.financiallyadjusted.com/startsmart

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Disclaimer: This content is for educational and informational purposes only. Please consult with an accounting professional for direct advice based on your specific business situation.

Transcript

Hello there! Welcome back to Financially Adjusted. You are listening to episode 2, and I'm Leslie Roth, your host. Today, the title of our episode is "Don't Fudge It, Just Budget." Everyone needs a budget. There's a reason I titled it this way, and you guessed it—I like to rhyme. And I might or might not have rhyming titles in the future. We'll see how it goes. The truth is if you don't have a budget, whether it's personal or business, you are just fudging it. You may have somewhat of a clear picture in your mind, or you think you do, but if you're not setting a budget every month, you are basically guessing, and you don't have a clear plan for your money. So, we're going to get into a few things around the topic of budgeting today. We'll talk about mindset, we’ll talk about tools, and we'll talk about how frequently you need to check in with your budget and how far in advance you need to make one. And what your personal budget looks like versus a business budget. First, we'll briefly touch on tools and what you're going to use to do a budget. We talked about this in the last episode, so if you want to listen to that, you’ll hear a little bit more about the tool that I recommend. EveryDollar is an app on your phone, and you can use it on a browser, and I highly recommend this. This is what I use, and I find it really nice because I don't know if you'll be budgeting with someone else, but I budget with my husband for business and personal, and we have one set up for each. It's just super easy to pull it up on my phone. We each have it pulled up on our phone when we have a budget meeting or we're working on our budget together. And we can pull it up anytime and put a transaction in there. And look at what's going on. And if somebody changed something, you know it's just super easy to have, and it's more likely you'll check in with it if it's accessible like that to you. So, whether it's EveryDollar or if it's another budgeting app, YNAB has one, NerdWallet has one, and I'm sure there are tons of others. Mint is one that QuickBooks or Intuit has had in the past, but they actually just discontinued that. So, you can search and see what's out there, but EveryDollar has a free version. I love it. So, I highly recommend that. You can also just use a spreadsheet, and you can pull spreadsheets up on your phone or if you have a budget in some kind of note-taking app, but it's not going to be user-friendly, and I don't think you're going to use it to check in as much. So, the idea is just to get a tool that's really user-friendly and is going to allow you to touch base with it more and not deter you from looking at it.

…One thing I definitely want to mention before I forget is…check me out on YouTube, Financially Adjusted, or at Financially Adjusted. I'm going to be doing a tutorial, a video tutorial of setting up a personal and business budget in EveryDollar. So, that will be a super helpful tutorial to go along with this podcast. So, if you're just listening to this…be sure to make a note to go check that out as well. Um, and I will try to break down in a simple way how to set up a budget that's easy to use.

…As far as frequency and… how much you're going to be doing at one time in your budget, that just depends on what works for you, but what I recommend and what I do myself is three to six months out. So, I know that it can be hard to project…further out, but a budget can be tweaked at any point throughout the month, and anytime that something changes, you can jump in there and change it. At the least, I would say do a three-month out budget for personal and for business…and you can look at the end of the month to revamp that depending on, you know, what happened in your business in that past month…

…So, ideally, three months at a time for…creating your budget. And then as far as how often you're checking in throughout the weeks and months, I recommend…a couple of times a week. At least once a week… What I do, I'm a small business, so I don't have tons and tons of transactions. Now, if you're a larger business, it might be harder to…have the workflow where you're constantly entering transactions and you're constantly checking in; the volume might be higher. So, it's more time-consuming. You might not have the time to do that. So, we'll get into…some more…workarounds with that and some more techniques for managing a budget. When I do the tutorial video on YouTube, so you want to check that out for sure. But um, if you are somebody that, you know, this is gonna be something that… It's not your favorite thing. You're kind of avoiding it. What I would recommend is putting…one day each week in your calendar that's an automatic task reminder…So it pops up for you… and it's kind of like nagging you to do it. So, whatever helps you and prompts you to check in at least once a week. Now, I am a nerd, and I like numbers. So, I'm one that I'm getting up in the morning. And I'm checking, you know, my bank accounts. I'm balancing checking accounts, I'm looking at transactions. I am always in it because I'm a nerd, but I don't expect everybody to be like that. You have to do what works for you in your life. So, you know, at least once a week have a time where you're checking in and you're seeing if you're on track to spend what you said you're gonna spend and you're on track with bringing in revenue that you thought you were gonna bring in. Just checking in and getting in that habit…makes it become second nature. So, the idea is to create a habit around this. Then it's not such a big deal. And it takes practice to get your budget down, get to know your business if it's new, and the flow of things every month financially… and you'll it'll become very easy and it won't be such a big deal… So, the idea is…three months in advance at least for creating the budget, checking in at least once a week and if you have a partner in your business or you have a spouse that's doing this with you, make sure it's on both of your calendars and you have a meeting set. You don't necessarily need to meet about it once a week, but once a month for sure. And one person needs to be checking in once a week just to make sure you're on track.

…The last thing we're going to talk about regarding setting up a budget is how you are creating your categories in your budget. When you're doing a business budget, you're gonna have categories for your income…or your revenue and then also for all of the business expenses…Now when you're breaking down categories for your revenue, you can do this however…detailed you wanna get. You can have a general lump sum revenue category and not break it down. It just depends. You might have a service business. You might have a business where you sell products. You might… I don't know, you might sell… you know services for coaching. Let's just say that. You might have some different coaching programs. So, you wanna see that broken out in your budget as well as, um, you know any products you sell. Like let's say you have a special energy drink, you might want to break that out separate from your services. Whatever works for you. And as far as your expense categories, What I suggest for a business budget is to break out your expense categories…so that they are similar in modeling the categories in your accounting system…for your P and L. So your profit and loss statement or um otherwise called income statement is gonna have all of your business expenses on there. Like advertising and marketing, automobile like expenses, office expenses. You name it so what you're gonna do is try to model your budget so that your categories line up. And I'll talk about that a little bit more in my YouTube tutorial…regarding budgeting…But this is gonna be very helpful when you're going in and you're measuring it against what's happening in your business. Personal can be a little bit more laid back because you're not trying to compare that to a business. It's just your personal budget. So… it's helpful to kinda look at your business budget each month and you're you're setting up a personal budget for three months in advance as well as business budget for three months in advance you really want them to completely coordinate. So you do your business budget. You know, Okay. This is what's coming in in my business this month. This is what's going out and this is how much I can pay myself. So once you know that then you're ready to set up your personal budget. And get your income…from your business into your personal budget. if your business is your livelihood this becomes so much more important because this is your sole income. So you wanna get that business budget down know exactly how much you're paying yourself… so that you can move on and then do your personal budget. So similar categories to your P and L categories… And at the month-end, You're gonna wanna go back when you're running your P and L for that prior month…and really take a look at how it that compares to the budget that you set up Was that real did that truly happen? Were there some extra expenses that were added on this month was there some extra revenue? And you know maybe those…expense and revenue categories went down. Either way, you want to look at what in the prior month and then tweak your future…months accordingly…

…It's okay to have bigger lump sum categories in your budget because your P and L that you do is going to be…actual factual…data that you're fine-tuning and is more on the detailed side each month. And then you're using that to…put it into put realistic data into your projection tool which is your budget. So they just they kind of flow together Your budget can have bigger lump sum categories you don't have to get super detailed like you would on a P and L…

…If this episode is making you cringe a little bit because you are not a fan of budgeting or numbers…stick with me. I think that once you get started with a budget and you build on the habit and build that budgeting muscle, it's not gonna be that bad. I've heard from a lot of people that this is something that they get used to, and it's not that big of a deal once you get in the habit and you've done it for a few months. Be sure to watch my tutorial…where I am showing you how to set that up in EveryDollar and what your personal is gonna look like and what your business is gonna like I think it'll really help you to have a visual of how you can set that up. Thanks for tuning in and have a great day…

Disclaimer: This content is for educational and informational purposes only. Please consult with an accounting professional for direct advice based on your specific business situation.