![\"budget,](\"http:\/\/farm8.staticflickr.com\/7169\/6825220387_f2b2222a2c_m_d.jpg\" "\\"Budget\\"")
One of the best business management tools you can learn to use is a budget. Oh, I know; \u201cbudget\u201d ranks right up there with IRS, death benefit, hemorrhoids and goiter as words we want to avoid associating with.\u00a0 But, this word does not have to be something vile and filthy.\u00a0 You don\u2019t need to wash your hands after writing it.\u00a0 It can, in fact, be an excellent tool for helping you improve your peace of mind and your quality of life.<\/p>\n
While it is an extremely valuable tool in getting your personal and family finances in order \u2013 thus getting the money problems monkey off your back, I\u2019m not going to go into all of that.\u00a0 This time we\u2019ll look at it specifically as a means of helping you run your business more efficiently.\u00a0 <\/p>\n
A budget, simply stated, is a tool to help you monitor your expenses so you keep them in line with your income.\u00a0 If you spend more than you make, you experience negative cash flow, which leads to mental anguish.\u00a0 If you spend less than you make, you enjoy a positive cash flow and end up skipping through the daisies on a sunny afternoon, singing a light-hearted song and reveling in the joy of life.\u00a0 Really!<\/p>\n
As a writer\/author your challenge is a bit tougher than many small businesses in that your income can vary greatly from month to month.\u00a0 How do we allow for the variances?\u00a0 We average.<\/p>\n
Go through your records and get an annual total for your writing income. If you are confident of doing better this year, adjust it to reflect your confidence, then divide by 12 to arrive at an average monthly income.<\/p>\n
If you are an author, you may encounter most of your expenditures as you complete a book in the form of artwork, editing and promotional expenses.\u00a0 You may want to average these as well.\u00a0 Things like your electric bill will be fairly predictable month by month based of past billings.\u00a0 Use actual amounts each month where you can.<\/p>\n
Your slush fund is a place where you temporarily store excess funds on months where income exceeds expenses for use on those months that either have higher expenses or where income doesn\u2019t meet your expectations.\u00a0 It could be a savings account, it could be a separate checking account, it could be a sock in your underwear drawer.\u00a0 It doesn\u2019t matter much as long as it\u2019s NOT in your main checking account.\u00a0 Wherever it is, it needs to be accessible so you can shift money out of and into the checking account as needed but not so accessible that it will get frittered away.\u00a0 Like in your wallet.<\/p>\n
For a budget to work, you need to track ALL of your expenses.\u00a0 If you don\u2019t, you may be doing fine on paper but you\u2019re still constantly broke in real life and it\u2019s because your budget is leaking cash though unaccounted for expenditures.\u00a0 You need to get and keep receipts for all expenditures.\u00a0 Keep a notebook where you can record things you buy that you don\u2019t get a receipt \u2013 vending machines, cab rides, bus fare, etc.\u00a0 It\u2019s these things that will surprise you how much money you spend without even thinking.<\/p>\n
To set up your budget, go through your check book and credit card statements and see what you spend money on for your business.\u00a0 If you have been writing seriously for a while and were keeping financial records, use those.\u00a0 If you\u2019re just getting started, I recommend keeping this as simple as humanly possible.\u00a0 Taking a chart of accounts right off the IRS Schedule C (Small business income & expense form) is often the easiest way to go. You can get a PDF version of that here: IRS Schedule C<\/a>.\u00a0 The instructions explain each entry.<\/p>\n While setting up a business budget is not nearly as trying as a family budget, nearly everyone will get a serious face-slap from the amount of cash they fritter away each month and how far outside of their income they are working. To fix this you have two ways to go: increase income or reduce expenses.<\/p>\n Increasing business income generally means working harder and doing more or raising prices.\u00a0 You may need to branch out and look for new revenue streams.<\/p>\n Reducing expenses is often the more realistic way to go, but it may require some sacrifices.\u00a0 The specifics will depend on your situation.\u00a0 You have to prioritize your current business expenses.\u00a0 For those things that must be kept, can you do them less expensively? What expenses can be cut loose?\u00a0 You must locate the veins that are hemorrhaging cash and pinch them off.<\/p>\n While a budget can be managed on paper using ledger sheets (I think they still make those!) I don\u2019t know any writers who don\u2019t have a computer on which to write, so you may as well use that.\u00a0 If you have Excel, (or similar spread sheet) you can set up a budget form in that.\u00a0 The MS Office web site offers many pre-configured Excel templates [Here<\/a>].\u00a0 While you can run a business bookkeeping system on a spreadsheet, it is often very useful to use a bookkeeping program like Bookkeeper<\/a>, QuickBook<\/a>s, Peachtree<\/a> or AccountEdge<\/a>.\u00a0 Any decent package has budgeting built into it.\u00a0 Some are expensive, shop around for the best price.\u00a0 The low cost packages (Bookkeeper) may suit your needs for many years but data may not import into a more powerful system should you need it.<\/p>\n Money problems make you miserable.\u00a0 If your writing business is, or ever will be, your primary source of income managing it well is essential.\u00a0 Being creative and imaginative is often more difficult if you\u2019re worried about whether or not you can pay your expenses.\u00a0 Yes, being an effective money manager is definitely worthwhile, and the budget is a valuable tool in accomplishing this.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" One of the best business management tools you can learn to use is a budget. Oh, I know; “budget” ranks right up there with IRS, death benefit, hemorrhoids and goiter as words we want to avoid associating with. But, this word does not have to be something vile and filthy. You don’t need to wash … Continue reading “Authors Learn to Embrace the \u201cB\u201d Word”<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[2,27],"class_list":["post-3011","post","type-post","status-publish","format-standard","hentry","category-tools","tag-author","tag-financial"],"_links":{"self":[{"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/posts\/3011","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/comments?post=3011"}],"version-history":[{"count":1,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/posts\/3011\/revisions"}],"predecessor-version":[{"id":21610,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/posts\/3011\/revisions\/21610"}],"wp:attachment":[{"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/media?parent=3011"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/categories?post=3011"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/tags?post=3011"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}The Hard Choices<\/h1>\n
Paper or Plastic?<\/h1>\n
Is It Worth It?<\/h1>\n