BUDGET Is Not A Dirty Word

Ever gotten that feeling of anger and despair when you thought of making a budget? Then chances are you've never cracked a dictionary to find out what this word really means, and worked out how you can use that to your financial advantage.

Here's the good news. Running your business on a budget does not mean downgrading the quality of the things you buy or not purchasing something your business needs to operate. What it does mean, is that you have to figure out how to make enough income to afford the things your business has to have and to keep your expenditures under your income.

There's more good news! The most valuable asset you have is your staff and yourself, and your ability to produce income. If you want more money to spend, then figure out how you and your staff can increase production to earn more money.

A second definition you need know is this: a BUDGET is the sum total of the income needed for the company to function, and to attain its goals.

Let's consider the first part of the definition; what it takes for you and your company to operate. Add up all the money you spent in the past year to see how much money went out the door including what you put on credit cards plus interest. Divide the total by 52 weeks, and multiply it by 1.036. The result is what your weekly budget is. That is the amount of money your business has to bring in just to operate plus barely keep up with rising prices. That doesn't include paying accumulating interest on the debt.

More than likely, you have financial goals you also want the business to attain; That's the second part of the definition. Reaching those goals must get added to your budget as well.

For example: a business owner wants to buy a new piece of equipment 6 months from now that costs $4,000. They divide the cost of the equipment by the 26 weeks they have before the target purchase date and learn they have to set aside $153.85 every week to have the cash for the equipment. This gets added to the budget, meaning the additional amount of income they have to put into the bank every week.

Most importantly, if you, the company owner, want to attain the goal of financial freedom - working because you WANT TO instead of because you HAVE TO -- then the most critical part of the budget needs to be the wealth building money you set aside in an investment plan and never touch.

Figure out the amount of cash you would need to have in savings to live without working. Divide that dollar amount by the number of weeks until the time you would like to be financially independent. Figure out how to make that much more money each week, and your budget is on the correct path to gaining financial freedom.

Do you absolutely want to be a millionaire in 20 years? Figure out a way to grow the business's income enough to set aside $961.54 a week in savings for the next 1,040 weeks and you have made it to being a millionaire! The additional interest earnings on top of that will be a fat bonus that more than keeps up with the rise in the cost of living every year.

In this day and age of computers this task of budgeting is made so much easier by streamlined and automated Money Management Software, such as shown in this on-line video.. This software operates as a companion to your accounting software for really easy day-to-day operation.