4 Things that happened when I put my business on a budget

tweet share share pin email

I know, I know.

It’s Self-Employment 101, but it’s something I was absolutely ignoring.

Three months ago, I had no idea how much I spent on my business each month.

While I could have probably figured out a ballpark figure with monthly expenses of $200 here, $50 there, two $15 software subscriptions, $250 each January—my (mis)understanding of how much it cost me to keep myself in business was a sham.

Enough is enough... Make 2018 the year you trade your worst clients for some of the best companies in the world. Click here to learn how.

Couple that not knowing how much it costs to stay in business each month with a slow summer, and you’ve got a recipe for disaster.

(Or, in my case, the “disaster” was suddenly having a credit card bill higher than my bank balance. Not a good thing.)

So, like anyone else between a rock and a hard place but also too stubborn to give up, I decided to do something about it.

You'll also enjoy this episode of our new podcast...
Rate this show: ★★★★★

I’d heard of the idea of being on a budget before, and since I liked the idea of being smart with my money (even if I didn’t do much about that idea), I decided to try putting my business on a budget.

The budgeting tool YNAB (which stands for You Need A Budget) was on my radar, and with it’s cult-like following and great advice, I knew that was the tool I’d be using if I was ever going to be the budgeting kind of person. (Because… who doesn’t like a good cult-like following?!?)

The gist of the YNAB budgeting philosophy is this: you decide what you’re going to spend your money on before you actually spend it. Every time you get paid, you decide which bills that money is going to pay by budgeting down to $0.00—not even a penny left to spare. And you don’t spend your allocated money on anything else.

It sounds strict, and it is, but it’s actually super liberating… especially if you’re dealing with a financial tough spot.

But since going on a budget certainly isn’t the easiest thing in the world to do… and because it takes WORK to babysit the thing every single week, I wanted to share what it’s been like to have my business on a budget so you can decide if it’s right for you:

1. I’m Paying Bills “In Advance” So I’m Not Crunched When the Due Date Comes

Especially with software subscriptions, it can be a lot cheaper to pay annually rather than monthly.

Do I want to save 10% on my invoicing software and 39% per year on LeadPages?

Yes, yes I do.

In all, I probably save close to $1,000 per year by paying for yearly subscriptions instead of paying month-to-month.

But do I like it when the multiple-hundred-dollar bill comes due and I’m not sure if I’ve got enough to cover it?

No, no I don’t.

With a business budget, I’ve figured out how much money I need to set aside each month to have enough to pay each of these bills when they come due. So each month, I allocate that money aside for that specific purpose, and know that as long as I can manage to set it aside, I won’t have anything to worry about when I have to pay the bill to renew the subscription.

(And no additional credit card debt! Yay!)

2. I’m Paying Down My Business Debt More Quickly

Before, when I had extra money in my business account, I’d either just let it sit there or give myself a little extra salary bonus.

But now, once all the bills are paid and I feel like I have a good enough cushion of “just in case” money, all that extra cash goes towards paying down my business debt.

The debt isn’t for bad things… it’s mostly made up of large purchases (like coaching programs, conference tickets, and travel to conferences) that have really helped me advance my business in important ways.

But now that I can see that debt balance on my business credit card, all I want to do is eradicate it down to zero.

So by paying off more than what I spend each month on my credit card bill, I’m reducing the debt faster and faster, and that feels great.

3. I’m Saving Towards Business Goals, Rather Than Going Into Debt for Them

In the past, when a really cool coaching opportunity or conference ticket became available, I’d just put it on my credit card and do my best to pay it off as quickly as possible.

But now, I’ve created a specific budgeting category to save up for those things rather than going into debt for them.

I realize that not all debt is bad debt when it comes to business, but I’m at a place in my self-employed career right now where I feel like I really shouldn’t have to go into debt for those things anymore, so I don’t want to.

And the best part is, I don’t have to.

4. I’ve Realized What My Priorities Are

Especially when your budget is tight and you don’t have enough money to cover Thing 1 and Thing 2… you’ve got to get really honest with yourself really quickly about what your priorities are.

Not only does doing this make sure you’re smart with the money you have available in your business account, but it also shows you what your actual priorities in business are.

A lot of times, especially as solopreneurs, it’s easy to get caught up in what we “should” be doing because we read advice that worked for someone else and we want to have their success too. (And a lot of times, that involves spending money on things we don’t actually need or that we don’t really want.)

So when you’ve got to make confronting decisions about allocating your cash flow, you realize really quickly what’s important to the core of your business and what’s not.

Staying on a Budget for the Long Haul

Now that I’ve put my business on a budget, I couldn’t ever go back. Yes, it takes a little bit of work to manage each month, but knowing that I’ve got my finances in control and every bill is saved for in advance just feels better. (Plus, using a ready-made budgeting software makes it so much easier. I can’t even imagine trying to do it with paper, pencil, and a calculator.)

And now that I know my numbers, I have more control over deciding how much money I’d like to be earning each month, when to pursue new projects, and when I can afford to scale back if I don’t feel like working as much.

And even if a monthly budget for your business isn’t the right move for you, I’d still encourage you to run the numbers on how much you spend on a month-to-month basis to keep yourself in business. It’s empowering information to have and can really clear up your mindset around your spending-based priorities.

tweet share share pin email

Say Goodbye to Roller Coaster Income

Your income doesn't have to be a guessing game every month. Let 4 thriving solopreneurs show you how in our free guide.

Related video:
About Chelsea Baldwin

Chelsea Baldwin runs Copy Power, where she teaches how to reverse-engineer copywriting based on psychology to get your readers hooked on you forever. She wrote a free ebook that’ll help you keep your traffic from bouncing and get more leads and conversions on your site.

Leave a Comment

*