Budgets do a lot of good, but you probably heard that already. If budgets do so much good, then why do we avoid them?
Budgets are like exercise and eating right. We know diet and exercise is good for us. We know diet and exercise will help us be better people. We know the amazing benefits that happens when we follow a diet and exercise. Yet, we don't. It is easier, and more rewarding in the short term to gorge ourselves and sit and surf the interwebs.
Budgets suffer the same stigma like diet and exercise. We know the benefits, but the discipline and work involved to maintain a budget or dieting or exercise scares us to accept the short term pleasures in lieu of long term success.How do we make a budget work? If you're single and you have a money spending issue, then get someone who you trust and is responsible. Make them your "sponsor" and submit yourself to their direction and oversight. Some churches offer budget counselors to help in this area.
Married couples need to be on the same boat. If one person controls the creation and maintaining of the budget, make sure to do weekly budget meetings with the other spouse. The reason is to make sure that everyone is clear on where the money goes during the week. This will prevent one person having all the control and keeping the other spouse in the dark.
The last thing you should do is get a budgeting program. If you read my other posts, you'll know I'm a fan of YNAB. The cost for YNAB is $60 dollars but you can get $6 dollars off by following this link. While $60 dollars may be a lot of money, just remember YNAB offers a 34 day free trial, and if you follow the rules in YNAB, the money you'll save will pay for the cost of the program.
I've used YNAB for a while now, and as you can see from my blog, I like the program. My wife and I are not perfect and sometimes we hit financial setbacks that are beyond our control; however, each time we do we stick with our budget. What we see is that we always have enough to pay for bills and get food. YNAB does work, and it works well for personal finances.
However, what about small businesses? Does YNAB work for a business owner?
The answer is... It depends.
It depends on your business. YNAB does extremely well for cash flow budgeting and cash based businesses. If you use a cash based accounting system (you get paid when a product/service is rendered and you pay bills when you receive them) then YNAB is great for you. If you need to have an accrual system, YNAB may not be the best choice.
I have a small company that I run part-time, I sell items online and also do some consulting work. I have QuickBooks Pro (since I am a QuickBooks consultant), but I find myself using YNAB more often. Even though I use both systems, there isn't a lot of work since both programs are able to import and categorize transactions.
I use YNAB to help me keep my cash flow steady and also keep my spending under control. It has the same effect on my company's finances like it does on my personal finances. There are some things that QuickBooks does that YNAB doesn't, like track and manage taxes. Also, YNAB doesn't track inventory. Lastly, the reporting features are lacking when it comes to business reporting, and it cannot do a balance sheet yet.
However, Jesse (the creator of YNAB) is working on improving YNAB for small business owners, so I believe these features will be available eventually.
If you want more information follow these links:
