Preparing a budget of money coming in and out of your business over the next financial year can help in many ways.
Subscribe now for unlimited access to all our agricultural news
across the nation
or signup to continue reading
It helps to keep your spending under control and within your means. Many businesses and people work on the theory that if there is money in the bank, it is available to be spent.
Having a budget shows you how many months that money may need to last until the next paycheque or income comes in. You may have forgotten about a large expense or loan repayment coming due in that period.
Budgeting keeps you on track for your financial goals. We all make goals to save an amount or pay off a loan. Keeping a budget forms the plan on how these goals will be achieved.
Budgeting can help your personal and business relationships. It keeps all parties on the same page when it comes to spending. It holds each other accountable and ensures you are working as a team on achieving your financial goals.
It helps you find financial contentment. It keeps you from spending money that you don't have and helps you enjoy the financial journey. Instead of "keeping up with the Joneses" you are focusing on your own finances rather than others.
Budgeting can keep you from feeling financially overwhelmed. You never spend beyond your means, you are always well prepared for unexpected expenses and fewer things have the ability to jump up and bite you.
It can help you avoid or get out of debt. You can plan your finances so that you can save and pay cash for big purchases and avoid debt in the first place or know that you have the capacity to repay that loan.
Budgeting keeps you organised. Between all your monthly bills, debt payments and other expenses things can just slip through the cracks. Comparing your actual expenditure to your budget may highlight that something has been missed.
Budgeting helps you prepare for emergencies or once-off unexpected costs. A review of your budget can help when deciding what other expense can be deferred or cancelled.
Many cashbook programs have a budgeting module that can be created from past data. All you need to do then is update the amounts to cover this coming year's plans.
- Helen Warnock is a partner at Kennas Chartered Accountants Rockhampton. This article offers general information only. You should consult your personal adviser to seek advice relevant to your personal circumstances before taking action.
