Tips for Managing Hits to Your Personal and Business Budgets
Sometimes life happens and we get hit with unexpected bills, market fluctuations, or changes in our businesses that we weren’t expecting. That can cause financial strain, which is why we all need these tips for managing hits to our personal and business budgets.?
The more prepared you are, the easier it will be to overcome those unexpected financial challenges.?
What is the difference between a personal budget and a business budget?
While both areas deal with finance, a personal budget and a business budget are very different. In either case- I refer to it as a spending plan. The word budget has a negative connotation and by thinking of it as a spending plan- it is empowering because planning means you are taking the wheel and being proactive.
A personal budget or spending plan centers on your household finances. This includes things like:
Business budgets or spending plans are focused on the financial aspects of a business and include categories such as:
Your personal or business budget may include other categories. Each of these spending plans and related accounting should be separated to protect yourself and your assets in the case of any legal actions.?
How do I come back from a financial hit?
The best defense is a great offense. Financially, for your personal life and your business, that means thinking ahead and planning for the unexpected. Building an emergency fund or cash reserves is a key part of that proactive strategy.?
But what do you do if you don’t have an emergency fund in place and you take a financial hit??
This is the time to dig in, analyze your numbers, and figure out ways to cover the expense or pay down any new debt related to the expense. Start with the big picture first and answer these questions:
From here you can adjust your spending plan and limit it to necessities until you get the financial crisis under control. This may mean cutting back on convenience services , unnecessary business luncheons, expensive business tools, and so on.?
Each situation will be different and will require a strategic plan to move forward and if necessary, get out of debt. But all will need to:
Once you know your numbers, you can build your strategy get back on track again and where applicable to eliminate your debt. For the clients I mentor , I suggest paying down the smallest balance first to give yourself a win and create positive momentum. From there, tackle the debt source with the highest interest rate. When that debt is paid off, the money that was used toward it can then be applied to the debt source with the next highest interest rate. Keep doing that until you are debt-free.?
Expand your Means
When facing a financial hit or working to improve your financial position, there are two strategies I often discuss. We’ve covered the first, which is reducing expenses, living below your means, and focusing on debt payoff if necessary.
The second is to expand your means, or in other words- increase your income.?
It has never been easier to start a business. If you are already in business, consider ways you can boost your revenue by adding products/services that don’t require major investments upfront. For example- you can become an affiliate of another business that is in alignment with your values or that you believe in and generate revenue when you refer people.?
Navigating debt and large financial hits can be very stressful. That kind of strain makes it difficult to make the best choices for your budget and/or your business budget, especially if you are unfamiliar with debt management strategies. Educating yourself on financial wellness from a money/business mentor is a great first step.?
If you are a business owner who would like to work with master mentors with extensive experience in finance, business building, establishing global brands, establishing trademarks and copyrights, and more, I invite you to join the Lechter Mastermind Mentorship . We meet monthly, and you will get the opportunity to ask any questions you have about building a successful and highly profitable business.?
Mastermind with Sharon and Michael Lechter – the brilliant strategic minds behind talking children’s books, the Rich Dad brand, several Think and Grow Rich Series books and the architects of growth strategies for many successful entrepreneurs. CLICK HERE TO GET STARTED!