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Budgeting Essentials Blog

Helping you master the practical essentials of Budgeting, Cash Flow, Accounting and Debt Relief.
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How Business Receipts & Notes = Success

Most people think of budgeting as an end of the year activity.  But the best way to create a budget is to collect your budget information as you are going through the year.  Learn more in this week’s blog.

 

When most people think about budgeting, they think of a process that begins a few months before the beginning of the New Year.  Everything is gathered and compiled in one quick process.  Details are adjusted to achieve goals for the coming year.  The budget is finalized and put into the accounting software so that it can help you manage your budget.

But is that really the most efficient way to create your budget?  How good is your memory going back 9 months?  To really do a good job, you are going to have to do some digging to look at what happened in those prior months and decide if they are going to happen again next year.  Depending upon how complex your business is, this could turn into a major project.

The good news is, there is something you can do to make budget time easier.  You simply start working on the next year’s budget as soon as you are done with the prior one.  You are probably wondering how that saves time when you are compiling the budget.  Doesn’t it take more time if you are continually working on the budget?

You could easily spend more time on the budget if you use the same process every month that you use when you are compiling your budget at budget time.  But that is not what I am suggesting.  Ongoing budget work is prep work that you do when the events are fresh in your memory.  You do the research when you are already thinking about events.  You do that by making notes for the budget when the events are actually happening.

Let me give you an example.  Suppose you pay your businesses water bill on a quarterly basis.  Each quarter you get the bill, rather than just paying the bill and filing it, you take a couple moments while the bill is out to record the usage numbers and the bill amount in a spreadsheet or on a note sheet in your budget file.  You can also note any unusual events that affected the bill that would affect your next budget.  When budget time comes, your research is already done, because you did the work when you had the document out.  You don’t have to remember the unusual events, because you already noted them.

This incremental work saves a lot of time when you are creating your budget.  You have already done the research necessary to create your budget.  You have taken notes on unusual circumstances so you can account for them as you are preparing the next budget.  You save the research time that you would have had to spend doing research.  The notes help you make better estimates for the next budget.  This is a great tip for creating a well prepared budget.

Be organized as you keep your notes.  If it takes you longer to find your budget notes than it would have to do the research at budget time, you just wasted the time you spent taking the notes.  Keep the notes together in a folder, organized by category.  You could save more time by keeping the categories in the same order that you work on them at budget time. 

The folder could be a physical one or an electronic folder on your computer.  Use the medium that works best for you.  I prefer the electronic method.  This allows you to save scanned copies of any documents that you want as budget references.  If your printer doesn’t scan to a file, many smart phones now have apps that will do that for you.

Continually investing a little time on your budget on an ongoing basis will make your budget process easier and give you better information to base your budget upon.  Remember, it’s never too early to start your budgeting process!

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God Bless your week!

 
 

Copyright

© 2019 Dan Heiland 2019 Kat Heil, LLC

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