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business budgeting, personal budgeting

Budgeting for Business and Personal

Mar 27, 2024

What images and feelings do you have when you think about the word and the concept of budgeting?

I'm guessing you probably started to glaze over and think about what part of your house needs dusting next :-)

The thing is, budgeting becomes unavoidable, especially as a business owner.  Not just that, you also need to be able to forecast your revenue and expenses, so you can see where the ups and downs are happening.

Having that visibility is powerful, because those trends allow you to make better decisions about what products and services to offer, how to manage seasonal changes, and when you need to work harder to bring in revenue to cover the lower earning months.

Step 1 - Build the Detail

It's important to start with the full view.  Whether you are using Microsoft Excel or Google Sheets, export the information from your accounting software and get the full detail (not just your categorised Profit and Loss or Cash Statement)

Step 2 - Build your Business Money Pie

Once you know your detailed income and expenses in your business, it's time to make sure that your money is working FOR you.  By that I mean, you aren't just working and earning money to pay expenses.

You are putting aside money for:

  • Profit
  • Tax
  • Expenses, including staff
  • Your salary (which is on top of profit)
  • Extras that might come up.

 Here is an example Business Money Pie:

Calculate the dollars around these percentages each month and transfer them into separate bank accounts, while keeping at least 1 to 3 months' worth of operating expenses in your business operating account. 

Step 3 - Pay Yourself a Steady Salary

Based on the percentage in your Business Money Pie for Owner's Salary, look at what you can pay yourself that is regular, which does break away from the percentage concept.  Look at an average and make that the amount you pay yourself each month.

Having that steady salary will make managing your personal budget much easier.

Step 4 - Build your Personal Budget Detail

This is the same principle as Step 1.  You need the detail in your personal finances as well, especially if you have a partner who also earns an income.

Look at all your income and your expenses.  Once you see it all written down, you can then see what could be stripped away.  

It's always surprising to see how quickly some things add up!

Step 5 - Build Your Personal Money Pie

Here comes the Money Pie again!  This time for your personal finances.

The concept works the same way - figure out what your percentages are for each slice and then the corresponding dollar amounts.

Transfer these amounts to the separate bank accounts that correspond with each pie slice, and then you have money for the key areas that work for your life!

Here is an example Personal Money Pie:

This is how I take clients through the process of budgeting and forecasting, so you can keep more of the money you make, plus make more money because you have the right information to make better decisions!

This then reduces your stress and financial overwhelm and allows you to have guilt-free fun!