Three Most Common Budgeting Errors

5 November, 2015

Now is the time to start working on your budget for your 2014 income and expenses — for both you personally and also for your business.

When it comes to creating a budget for the next year, it’s essential that you estimate your spending as realistically as possible. Here are three budget-related errors commonly made by individuals and small businesses, and some tips for avoiding them.

1. Not Setting Goals. It’s almost impossible to set spending priorities without clear goals for the coming year. It’s important to identify, in detail, your business and financial goals and what you want or need to achieve in your business.

2. Underestimating Costs. Every business has ancillary or incidental costs that don’t always make it into the budget–for whatever reason. A good example of this is buying a new piece of equipment or software. While you probably accounted for the cost of the equipment in your budget, you might not have remembered to budget time and money needed to train staff or for equipment maintenance.

3. Failing to Adjust Your Budget. Don’t be afraid to update your forecasted expenditures whenever new circumstances affect your business. Several times during the year you should set aside time to compare budget estimates against the amount you actually spent, and then adjust your budget accordingly. Don’t look at your budget as a rigid spending plan – remember, budgets should be flexible to accommodate changes as needed.

Please call our office today if you need help in setting up a budget to meet your 2014 financial goals.

SMART MONEY TIPS are published to provide practical personal financial tips relating to budgeting, saving, spending, debt, credit, financial wellness, planning for the future, and other personal finance topics. For comments or questions, please e-mail us at at Linda@financialfreedomcoaching.com. We are located in the Tampa Bay, Florida area and are dedicated to educating you to take control of your personal finances and financial future. Services include confidential personal financial coaching and mentoring, personal financial counseling, and financial education through financial literacy seminars. Linda A. Stortz is a CPA and financial literacy advocate, having earned the Accredited Financial Counselor and Certified Credit Counselor credentials. For more tips, please go to http://www.financialfreedomcoaching.com.

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