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Personal Finance: Eight ways to make your Budget Work


  • ACCEPT THE LEARNING CURVE
Living within a budget is an educational curve for any new entrepreneur. Trimming your expenses, knowing how long a pay cheque will last, or how much of a cash reserve to keep around are issues which require skilful management. Knowing these techniques takes time. But a start-up can learn to adjust its budget mostly through practical experience, and what was once a shot in the dark would gradually become a more predictable and useful practice.


  • BE PREPARED TO MISS YOUR ESTIMATES
Knowing that you are going to miss your estimates doesn’t make an entrepreneur unintelligent or a bad businessperson. Instead, a good businessman must in such cases try to miss them intelligently and start thinking of ways this can be corrected at the earliest. To keep things in line as much as possible, try to adjust from some other area within your overall budget to account for the adjustment.


  • WORK FLEXIBLY
As with setting up a budget, sticking also often boils down to a willingness to be flexible. For instance, if your start-up’s revenue does not match what you expected — and there’s a good chance this might be the case in the first few years — trim expenses to compensate. By the same token, if you are taking in more than anticipated, it might be time to invest in better equipment.


  • WATCH YOUR CASH FLOW

If you want to stick to a budget, make sure that your inflow more than compensates for your outflow. Monitor your income closely to make certain that you have adequate funds to pay your bills, particularly if your business is prone to long lapses between pay cheques.


  • ERR ON THE SIDE OF BEING CONSERVATIVE

When setting up your budget, it is always a good idea to overstate your expenses and lowball your expected revenue. Look at budget savers and other ways to lessen the burden on your income, when initially planning your business expenditure.

  • NURTURE A CASH CUSHION
The uncertainty of budgeting — both in terms of income as well as expenses — stands as one of the biggest threats to the survival and success of any start-up. While trimming expenses to the absolute bone is always a good idea, it’s also prudent to set aside income whenever possible. Not only can that money come in handy for predictable expenses, it also can prove an absolute lifesaver, should an unexpectedly high expense suddenly crop up.


  • CHECK YOUR BUDGET EVERY MONTH
It is always helpful to check budget every month and examine your cash flow to make certain your available funds are sufficient to meet your liabilities. If you’re adjusting your budget as you go, it is of some help to have some emergency fund to take care of monthly overruns.


  • BUDGET AS A FORM OF RESTRAINT

Setting up and sticking to a solid budget is the most effective teacher of fiscal discipline there is. But don’t be shy about busting your budget if an occasion should truly warrant it. It’s often impossible to budget for a valuable last-minute seminar or a trip to a trade show to make valuable contacts. If you are too rigid with your budget, you’ll refuse to spend when you really should.

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