Budget Time

Preparing a budget is one of the most important things every household and small business should do. It is a relatively simple task, but can be a confronting one. It can be quite stressful to see the numbers on the page, especially when the expenses are higher then the income!

Personal Budget

We recommend people prepare or review their personal budget at the start of each financial year or if there is a significant change in their circumstances, such as buying a house, getting a new job or receiving a pay rise.

To prepare the budget, set up a spreadsheet to record the household income on a weekly basis. This could comprise of wages, rental income, social security payments, pension income or investment income. Then list all the expenses under the following categories:

1.      Bills

2.      Groceries & petrol

3.      Entertainment

4.      Savings

It is crucial to be as accurate as possible about each income and expense to ensure you are able to stick to the budget. Seeing these figures on the page will allow you to assess where your money is going and what is important.

The final step is to set up automatic transfers into each of the four expense accounts listed above. This ensures there is enough money in each account for each expense type, and you don’t overspend.

Business Budget

We also recommend businesses set up their budgets at the start of each financial year. Business budgets work a little differently from personal budgets as the income is not as clear cut. The income line in the budget works more like a target for what the business hopes to achieve each month. The expense lines are estimates based on the costs from the previous year.

Prepare your budget on a monthly basis then you can import into your accounting software. You will then be able to compare your monthly budget to the actual results and ensure your costs are under control.

We Can Help

If you are new to budgeting or would like some help fine tuning it, please reach out. Our office would love to help.

Contact us