Budgeting is a dreaded task. But it shouldn’t be. Budgeting should be a freeing task that clarifies where your organization will spend money and ways to generate revenue. So then why do so many people dread it?
Budgeting is scary because it involves money. We all like money, right? So why’s that scary? It’s the connotation about financial success that puts pressure on us.
Our materialistic culture has raised financial status to be a measure of success. So naturally we’ve begun to think that our success is directly linked to the amount of money we have. And sometimes, we can be just as scared of being successful as we are of failing. Success raises the bar of standards to maintain. If we’re consistently maintaining the status quo and failing at budgeting, then we haven’t let anyone down.
Plus, for many start-ups, small businesses, and nonprofits, cash flow is a consistent challenge. We are constantly bombarded with having to prioritize which vendors or bills we pay first, or thinking about how long we can wait until the next big payment to clear. This creates decision fatigue and a sense that financial management is stressful. If we’re consistently stressed about financial decisions, it becomes a chore and something we dread.
So how can we change these two reasons we dread budgeting, and budget effectively? Here are three simple tricks to increasing your ability to manage a budget.
- Start with what’s in hand. Too often, we fall into a Goldilocks situation when it comes to budgeting. We either budget for an ideal to give us a goal to work towards (or we pad the budget in expectation of cutbacks). Or we budget too conservatively to set us up for success… or a worse case scenario. Having a contingency budget is a great idea. Be sure to have a practical budget first. A trick: view your finances as enough. You have enough. You have what it takes to do what you want or need. If we stop wishing for more, or thinking we need more, we will manage what we have better. Sounds cheeky, I know, but it works. If you look at the money in hand, or the income your are confident about generating, and start a budget with that, you’ll suddenly be less stressed about revenue goals. Then, you can use money above and beyond to do more. Build out the “what if” plans, for if you were to spend more, not how you can be more conservative or get by with less.
- Build out contingencies. What if that contract falls through? What if this event gets cancelled? Worrying about money is stressful. But what if you didn’t worry about what ifs? Have contingency plans. And I’m not just talking about the worse-case-scenario planning. While you should have a baseline budget and an exit strategy, you should not always be planning for the worst. On the contrary, plan for how to grow. Have a vision. Draft an action plan for your current needs, and build contingencies for what you’d like to do when you grow.
- Create a system that works for you. Quickbooks too complicated for your day-to-day budgeting needs? Skip worrying about debits and credits and put together an Excel Spreadsheet. Always on the go? Use Google Sheets or another cloud-based software. Visual learner? Use a visual template. Go with pencil and paper. Do what works for you. That way you will actually use it.
Personally, I love Excel. I build out program areas or specific project budgets in separate sheets. This allows me to edit smaller details without messing up formulas or assumptions on larger department budgets. Then I take the the column with all of the totals and aggregate them on a simplified sheet.
Want to a copy of a tried and tested budget template of mine?