Budgets. They are like New Year’s Resolutions – everyone makes one but nobody follows it. You might create a budget with all the best intentions. This year will be your Best Year Ever! And when you miss your first goal or monthly target you shred the budget in disgust, thinking all is hopeless. Ok, so maybe this is a little dramatic. It might take you two months before you shred the budget document…
It is just a matter of perspective on how you look at this business tool. You can look at it as a “report card” with a passing or failing grade. Or you can look at it as a road map that illuminates high points and bumps in the road. Which perspective would you rather hold?
When you create a budget, it is important to actually write it down. Just keeping it in your heads means you are avoiding making a commitment. Keeping the numbers in your head means nobody knows what your plans are, so nobody knows if you’ve succeeded or failed and they can’t judge you. If you write the numbers down, it can be the ticket to growth because the budget will give you a “heads-up” – tell you where you are going and quantify the results. If you use it wisely you can determine where you are in the moment compared to where you want to end up.
There are classes in accounting for non-accountants. One of the modules is budgeting, and you’d be surprised at how many students actually had no budget written down. So a good homework assignment is to work on a budget and put a piece of paper in your wallet. Every time you open your wallet to buy something write down how much you spent. The homework assignment helps you identify the value of budgets and the practice of writing them down. Miraculously, you’ll find money. From this small little exercise, you’ll identify where your money went and can make an informed decision on whether your spending was appropriate.
Creating a budget is truly as simple as this. It doesn’t need to be complicated and it doesn’t need to be a huge undertaking. It just needs to be written down and reviewed periodically so you can avoid crashing into the rocks. Marcy Maslov was co-contributor to this press release.