4 Reasons You Need A Budget
Obviously budgeting is important. Right? But what makes it so important? Unfortunately many business owners view budgeting as a ‘once and done’ type of task. When in reality, however, a budget should be a key, everyday factor of your business.
But before we can dig into all of that, we must address the most important question when it comes to budgeting! "Why is having a budget so important? I keep pretty good track of what I'm spending." And while keeping track of your spending is good, it doesn't replace the need for a good, rock solid budget. Keep reading to see top 6 reasons why you should have a budget!
It helps keep your eye on the prize.
A budget helps you figure out your long-term goals and work toward them. If you just drift aimlessly through life, tossing your money at every pretty, shiny object that happens to catch your eye, how will you ever save up enough money to expand your business.
It helps ensure you don’t spend money you don’t have.
Far too many business owners spend money they don't have—and we owe it all to credit cards. Before the age of plastic, people and businesses tended to know whether they were living within their means. At the end of the month, if they had enough money left to pay the bills and sock some away in savings, they were on track. These days, people who overuse and abuse credit cards don't always realize they're overspending until they're drowning in debt.
It helps you prepare for emergencies.
Life is filled with unexpected surprises, some better than others. When you get laid off, become sick or injured, go through a divorce, or have a death in the family, it can lead to some serious financial turmoil for the business as well as personally. Of course, it seems like these emergencies always arise at the worst possible time—when you're already strapped for cash. This is exactly why everyone needs an emergency fund.
Your budget should include an emergency fund that consists of at least three to six months worth of fixed business expenses. This extra money will ensure that you don't spiral into the depths of debt after a bad quarter.
It helps shed light on bad spending habits.
Building a budget forces you to take a close look at your spending habits. You may notice that you're spending money on things you don't need. Do you honestly need a music streaming service for your business? What about all those Amazon charges - do you really need that many office supplies? How about that software you are paying a recurring monthly fee for that you don’t use and could live without?
Want to Learn More?
Stay tuned for my 'All About Budgeting' series, and be on the lookout for more exciting things I have coming your way!