Anne-Marie Saint-John, Alva, Long Island City, NY >
Simple Guide to Budgeting
To reach your financial goals, you need to keep track of the money flowing in and out of your business. This financial plan is known as a budget.
There are three steps to creating a budget:
- Identify your Net Monthly Income
This is what remains of your income after deductions such as taxes and insurance are made. It is the money you actually bring home. - Identify Your Monthly Expenses
These are all the things you spend money on. These expenses may occur monthly, such as rent and phone bills, or come up periodically, like car insurance. - Subtract Your Monthly Expenses From Your Income
If you have money left, you can spend or save it. If you are left with a negative number, you either have to reduce expenses or increase income.
In addition to your budget, you should also create a Personal Financial Statement, which aids you in obtaining business credit.
Your personal financial statement describes your resources (everything you own, like money, cars, and investments) and your obligations (all your debts). Subtract your obligations from your resources to calculate your total financial worth- this information is vital to lenders.
