TCFBO #036: Budgeting Principle #4

Read Time: 2.5 minutes

At the beginning of the year we sat down with our daughter to work out a study plan to take her through to mid-February.

After the first day of following the plan, we asked her whether it was working.

It was.

Then a few days later, we asked again.

Turns out that it wasn’t working quite as well as it had on the first day.

But after a few questions about why it hadn’t worked, she was able to make a couple of adjustments and get back on track.

No big drama. (Which, if you’ve ever had to deal with teenagers, you’ll understand is no mean feat!)

And that’s exactly how to tackle… 

Budgeting Principle #4

“Review and Adjust”…with no big drama.

Having a plan is great.

And a budget is simply having a plan for how you intend to use your money.

But just like any plan, you can almost guarantee that as soon as you take action the plan needs adjusting.

That insurance policy you budgeted for?

Suddenly gone up in price.

That marketing campaign you costed out?

Came in under budget.

That heating bill for the month?

Gone through the roof during a cold spell.

That tax bill you were expecting?

Got an unexpected rebate instead! (Well, we can dream, can’t we?)

The thing is, as small business owners, we operate in a constantly changing environment.

As such, it’s essential that we regularly review and adjust across the whole of the business, and that includes our budget.

So here are five practical tips for reviewing and adjusting your budget…with no big drama.

1. Redirect Funds to Cover Overspending

If you overspend in one category, decide where that extra money will come from.

Move money allocated from categories that you’re currently underspent in to the overspent category.

This might mean cutting back in other areas for a short period of time.

2. Conduct Weekly Expense Checks

Make it a habit to check your expenses on a weekly basis.

This allows for more immediate adjustments and prevents small issues from becoming bigger problems.

3. Close Off and Plan Each Month

Dedicate time at the end of every month to review and reconcile your budget.

Compare what you actually spent against what you planned to spend.

Then use this insight to make informed adjustments for the upcoming month.

4. Adjust a Category's Budget

Keep an eye on your spending patterns.

If you're consistently over or under spending in certain areas, rethink those budget allocations.

The key is to be honest with yourself and adjust the allocations to better align with your actual spending habits.

5. Learn from Your Budget Reviews

Use each budget review as an opportunity to learn.

Take the time to understand why you were over or under budget and how this impacts your business. 

If you pay attention, these reviews will also start to highlight underlying beliefs and behaviours you may have around money, allowing you to change those that may be hindering your progress should you choose to do so.

Your budget is not something do set at the beginning of the year and reveiw a year later.

It’s a tool that, if used regularly, will accurately reflect and support your business’s financial health and goals.

And just like everything in life, the more you do it, the more effective you’ll become at it.

Let us know how you get on and we’ll see you next week.

Paul & Philly

P.S. If you missed them, you can read Budgeting Principles #1 – 3 here, here and here.

Whenever you’re ready, there are three ways we can help you:

1. Grab a copy of Paul’s book “Backwards Planning - A Simple Method to Move You and Your Business Forward” to discover how to reverse engineer a life and business you truly love.

2. Book a facilitated “Life Vision Session” to start creating a life and business that are fully aligned with your heart’s desires. We’ll arrange a pre-session call with you to say “Hi”, explain how the Life Vision Session works and answer any questions you may have.

3. Apply to join “The Clear Focus Business Academy” to ensure your business is the most effective it can be at providing the money and lifestyle you desire. Simply drop us an email or contact us here to tell us you’re interested and we’ll send you more info.