Budgeting for your business can be a challenge.

Between fluctuating sales and customer invoices, it can be tough to figure out where your money is coming and going.

Wealth creation mentors from BMA Consulting say that a well-thought out budget is a key aspect of financial security and success. Regardless of how much money you have, if you don’t budget you can lose it all.

While most people think of household budgets, commercial budgets are often overlooked. A simple version may see a businesses’ profit or revenue measured against their costs or expenses, there are many variables at play.

Still, whether you’re a business or an individual, you’ll need cash flow and healthy spending habits. But what happens when things just don’t go according to plan and you under budget or over budget? 

The best case strategy is to practice the zero-based budget. The zero-based budget is where income minus expenses equals zero. In other words, you account for every single cent before you spend it. 

A big drop in petrol prices or having to top up your grocery shopping might mean you’re not hitting the zero mark with your budget any longer though. 

In such a case, you could find yourself confused or resigned to a busted budget. However, there’s always room to grow. So don’t stress if your budgeting is currently getting the best of you. 

In this post, we’ll discuss what you can do to get your numbers back to zero. 

What you can do when you’re over budget

We all know that it can be such a bummer when you realize that you’re over budget. We’ve all been there. But with intention and commitment, you can easily get back on track. 

Keep in mind that the goal of a zero-based budget is for your income less expenses to equal zero. In this case, if you spend too much money on groceries this month, say $500 instead of $350, you are $150 in the hole. This calls for you to make up the difference. 

Carefully go through your budget plan and see if there are categories that let you get by with less this month. Below are a few ideas:

• Have a date night indoors: Consider renting a movie and enjoy your dinner on the couch instead of eating out and paying for a film. You will have saved the $150 (and perhaps more) that you’d have otherwise spent on the restaurant and theatre tickets. 

• Challenge yourself to a spend-freeze: Avoid some of your favourite spots where you spend money on fun things. Instead, find ways to have fun for free. 

• Save a little from here and there: Delay your dry cleaning, use coupons, or even return your recent (unused) purchases. If you get creative enough, you will easily come up with the $150 in no time. 

Clothing manufacturers Tierra Alma explain that clothes can be one of the ways budgets blow out. They note “there are a range of budget friendly things you can do to stretch a clothes budget – from practising clothes care, to buying quality products that last longer, and buying sizes that fit you. Many people see a “sale” and go wild. This can cripple your budget. Only jump into a sale if you have a slot in your wardrobe and need to replace an item.”

What you can do if you’re under budget

Got some leftover money from your budget? Great!

This is more of a ‘good problem’. 

When you successfully spend less than you had planned, you have more money to put towards your goals. The only thing you need is to ensure you move the money around. There are two ways you can approach being under budget:

1. Create an emergency fund

Sum up all your under-budget categories. For example, if you have $50 under on your entertainment, groceries, and car repair budget, that’s all surplus to your budget (to a total of $150, which is the $50 from each category). You can put the money to good use by building an emergency fund.

Once you have a full emergency fund in place, you may choose to put the extra cash towards a major upcoming expense, such as a vacation fund, or your next car insurance bill. It’s totally up to you. 

Remember, you can choose to put a chunk of the money towards your savings, debt, or a big expense, which can ultimately give you a big jolt of momentum. Try it out yourself and see what we mean. 

2. Reward Yourself

In case you go the $50 under from your restaurant budget because you got the cooking bug, go ahead and treat yourself. Consider adding the $50 to your spending plan the following month on any category of your liking. 

Rewarding yourself at the end of the month is almost as important as saving, as it provides incentive for yourself and encourages you to keep going. Jeanine Sciacca runs a life coach business and stresses that rewards are so helpful for progress. Having something to look forward to and make you feel like your hard work was worth it is a great way to maintain your motivation.

Why you should adjust your budget

Once everything is set, you will want to find extra ways you can avoid getting under and over budget in the future. An easy way to do this is to ask yourself a simple question, ‘Why did I underspend?’ Or ‘Why did I overspend?’

You might find out that there were factors outside your control that caused your budget to go off-balance. Maybe you were having trouble keeping up with the rising appetites of your teenage boys. In such a case, you can consider increasing the budget for your groceries in the foreseeable future. 

You might also discover a few occasions where underspending or overspending were under your control. It could be that you just don’t purchase new clothes as often as you think you do, and would rather just go out to eat on Friday nights. Remember it’s your money that you’re spending, so make the necessary adjustments until you get it right. 

Overspending happens when we spend without thinking much about it. Perhaps you decided to grab that new pair of jeans just because, had to buy a last-minute gift, or simply didn’t remember how much money you’d left in any given category. 

Along with adjusting your budget, you want to track your spending meticulously. This will help you keep on top of how much you’re left with for spending by manually entering your transactions.

Budgeting takes time to learn

People who are new to budgeting find themselves over budgeting or under budgeting a lot. 

This is because it takes time to learn exactly how much money you need per category. Try giving yourself about 3 months to get everything right. This will be enough time for you to figure out how much you spend on things like utilities, groceries, and clothing. 

Once you figure out the costs of these expenses, ensure that you’re aware of all your other expenses and change your budget plan as needed. Soon, you will become a budgeting pro. 

That’s when you ideally hit the spot and budgeting becomes a lot more fun. 

So, how are you going to budget in 2020?