4 Things You Should Never Do when Setting a Budget
Setting a budget is not for a quick win or a quick fix for your business or even in your personal life. If you are looking out for the future of yourself, whether it's future as in a month from now, five years from now, or 10 years from now... you are trying to set your future self up for success. Having a budget is part of the process to get to where you want to go. We've talked a lot about budgets on this blog and on our Instagram, here are a couple posts you can reference to learn more: 3 budgeting tips and budgeting + financial planning.
Today I'm talking about 4 things to never do when creating your budget:
1 | Guessing on your expenses
We know that budgeting is very overwhelming and hard for people, and this can be applied to both personal and business finances. But one of the biggest mistakes I see people make when setting a budget is not looking into your actual expenses. If you don't have your actual expenses split out, you need to. And if you don't want to do it yourself, you know where to find us for the bookkeeping, because that is where you have to have your bookkeeping up to date to know the actuals of your numbers. You need accurate numbers to make a budget, and so that you can also project for what's happening in 2025. If you don't have those accurate expenses, you have no idea what you're actually making once you take out the expenses and can't accurately save and plan for the future.
2 | Not prioritizing an emergency fund
It's not a secret that this year has been slow for a lot of people, due to the economy and everything that's going on. So this is a good time more than ever to really make sure that you are prioritizing your emergency fund instead of just spending on random things. Make sure that you have enough saved up for three to six months of operating expenses, depending on the stage or size your business is in. If you are not doing this right now, make sure that this is a big goal for you as you finish out this year. Get that emergency fund up to three to six months of business expenses. That way if something comes up or you have a particularly slow month of sales, you can still keep your business up and running.
3 | Create unrealistic projections and goals
If you're going to create unrealistic goals and you don't end up hitting them, you're going to feel defeated. You're going to feel like it's never going to happen, and you're going to end up throwing the budget out. You're not going to really want to continue on with this. So make sure that it is realistic. If it's something that you're continually not hitting those goals that you've set for yourself inside of your budget, make sure that you're willing to adjust. It's okay to take longer to hit your goals if you can't put as much away as you want. Keep it realistic, keep it attainable so you feel empowered and capable of sticking to your budget and reaching those goals.
4 | Not being willing to change
If you're not willing to change your goals or change your behavior in spending, or change some stuff in marketing to get more sales, then change the structure of your team. If you're not willing to change that, then you need to go ahead and go back and change your goals. Either way, you have to make sure that you're willing to change in order to achieve where you want to be. If you want to hit the goals you set, chances are you're going to have to change something. That's the only way to improve otherwise we just stay the same (no shame if that's what you want to do, there's power in being content exactly where you are!).
Hopefully these tips are helpful! If you'd like help creating your budget, we do offer a one-time review and budget creation! Just reach out for more info if you're interested, or check out our personal and business budget templates in the shop!
