How to Set a Personal Budget
Before you launch your business, it would be very wise to set a personal budget. The beginning stages of entrepreneurship will be very volatile financially, and you may even lose money at the beginning. Having a personal budget will allow you to stay on track throughout with your own finances. This guide will help you create a monthly personal budget that you can stick to.
Gather Financial Documents
Before you get started, try to gather any financial documents you can. This could include bank and credit card statements, bills, or pay stubs. Having these items on hand will make it much easier to build your personal budget. While you are at it, start either a notebook page or excel document that can be your budget.
List your Income
First, list all of your sources of income and the amount from each. Be sure to include everything from regular pay to tips. If your pay changes, try to find an average and use that. These amounts should all be in per month.
Define Your Expenses
Next, make two lists of your expenses. One list will be all of your fixed expenses. Fixed expenses stay the same each month. This might include rent, cell phone bills, and car payments. The other list should include variable expenses. Variable expenses change. They might include food, electricity, or clothing. For your fixed expenses, write the cost for each month. For the variable expenses, make an educated guess what they might be on average. This is when having multiple financial statements comes in handy.
Compare and Adjust
Your personal budget should be balanced. This means that your total income should be greater than your total expenses. If your expenses are higher than your income, you will need to find ways to lower them. Try decreasing the amount you spend on luxuries. It may not be fun, but can save you a lot of trouble in the long run. If your income is higher, why not set up a savings account? Setting even a small amount of money aside each month can add up very quickly. Also, it may take a month or two until your budget is settled. If you notice something, feel free to adjust it.
Stick to It
This is the most important step in setting up your personal budget. You need to stick to it. There may be times when you want to spend more money. However, doing that may have negative outcomes for you. Please make sure you follow your budget every month. As an entrepreneur, you need to make sure that you are financially stable. Feel free to share what you do to have an effective personal budget in the comments!