Episode 28: Take Control of Your Finances with Smart Budgeting

  📍 Welcome to CreativeMind Smart Money, the podcast where creativity and business smarts collide. I’m your host, Samantha Eck, bookkeeper, business coach, and your go to guide for building the creative business of your dreams. Whether it’s mastering your money, streamlining your systems, or growing your business, I’m here to share insights that empower you to thrive.

Plus, I’ll be bringing in industry experts to dive into all aspects of entrepreneurship, so you can turn your passion into profit without losing your creative spark. Let’s get started.

  Okay, I am so excited for today’s topic. Hello and welcome back to the Creative Minds Smart Money Podcast. Today we’re talking about budgeting. Budgeting isn’t about cutting out things that light you up or make you happy. It’s about creating a plan for your money that supports your business and your personal life.

Too many creatives that I know avoid their finances, and I really want to focus on helping you to stop, avoid your finances. So, Today I am so excited to talk about budgeting and how it’s not limiting and it’s not restrictive and how we can use budgeting to grow our business and understand our numbers on a deeper level.

So budgeting is something that really gives you clarity and control and power over your finances. It’s not something that’s meant to be restrictive. It’s not something that’s meant to be limiting. It’s supposed to give you that control and that clarity and that confidence. It helps you know where your money’s going and it helps you to avoid financial surprises like tax season panic.

You need to think of it as a creative plan for your money. Just like a plan for your project. So you have processes, you have plans for your projects, you have checklists and processes that you follow, and this is very similar to a budget. It’s a checklist of ways that we can ensure that we are not, you know, you know, So, there are two sides to budgeting.

There is saving and there is investing. When we think of budgeting, we think of, you know, our emergency fund. How can we set up an emergency fund in our business? And I think that’s really important. Maybe you haven’t set up an emergency fund. I’ve told you in some past episodes that creating a buffer is so important.

But having three to six months of operating expenses to cover yourself is so important in a business because it allows you to think forward. You now have three to six months in between you and complete obsoletion as a business and that is so important. We also want to think about taxes, why we need to set aside 25 to 30 percent of our income tax or our income in a separate account, and then recurring expenses.

So how we can know and prepare for those fixed monthly costs, like some software and subscriptions, writing those down somewhere and just knowing when those are recurring. So when we think of a budget, those are the three important things we want to think about. How much we want to set up for taxes, how we can build an emergency fund and recurring expenses.

Now, when I talk about an emergency fund, I’m not saying, you know, take 1, 000 every month and set that aside for an emergency fund. If you’re a sole prop or a small business owner, maybe you’re even a mom or someone who helps the family, it’s very hard not to take money out of your business. And that’s what it’s there for.

You’re making money for you and your business. But the way I’ve done it and how I’m helping to build up a very slow emergency fund is setting aside, you know, 100, 200 a month. That way it starts to slowly build and I can have my business slowly have that buffer so that it’s not something very unexpected.

And then you also want to understand where you want to invest. So you want to understand if you’re going to be investing in courses, workshops, coaching, whatever it is that you want to level up your business, you want to start thinking about that because that’s going to be key in helping you to set up your budget.

You also want to think if there’s software or things that you want to invest in and outsourcing. So if you’re looking at hiring a bookkeeper or a VA, you want to factor that into your budget. And you want to understand all of that because all of that is so important. Now that you can think about those things, you want to start to create a budget that actually works for you.

And creating a budget is actually super easy and super simple with your business, especially if you already have somebody to track all your expenses, all your income. You want to obviously know your numbers. So the first thing is going to get that into some sort of accounting software, spreadsheet, whatever it is, you want to put it into a, Software or a spreadsheet and just understand it and track it for at least a month.

You want to make sure that your finances are separated. You’re both business and personal. You don’t want to have those set in the same account or set together. And then you want to start categorizing all those expenses and Analyzing them. So what are your fixed costs? Do you have rent? Do you rent a space?

What are your software costs? What are your utilities for your space? I want to clarify that as well. Utilities for your personal side, like if you have a home office are completely separate and not tracked. Within your business. They’re tracked on your tax return. And that’s for someone who is doing your taxes And then you also have your variable costs.

So if you’re someone who likes to give gifts, I love giving my clients gifts So I track that in my budget. I say, okay, I have six clients that have birthdays this month I need to make sure I set aside enough money so that I can send them all a gift and That’s something you also want to think about if you’re thinking about traveling next year to a conference You want to make sure that that’s set aside I want to also be clear that a budget is not set in stone.

It’s variable. You can adjust it on a month to month basis. I usually like to set a budget on a yearly basis and then we can pivot as we go throughout the year. You also want to think about those growth investments, marketing, hiring help, coaching, whatever it is you want to think about it and add it to your budget.

So if you’re like, okay, I know later on down the road, I’m going to want to, you know, get a coach to help my business. They’re going to cost a thousand dollars a month. I need to make sure that I have a thousand dollars a month in my coaching category that is allocated. And then you want to allocate your income.

So if you’re estimating that you’re going to bring in 10, 000 a month, and this is so important too, I want to make this clear. When you’re budgeting, you don’t just budget. For your expenses. You’re not just like, oh, hey, I have expenses. You need to know and understand how much money you might have coming in and you want to go off the numbers you have now not the numbers you have in the future because If you make more money great, then you can pivot and adjust your budget But you don’t know if you’re going to make more money Like you don’t know today if you’re going to make 30, 000 more three months from now.

So you want to set the goals intentionally. Look at your income average, you know, over the last 12 months. This is what I do with my clients. We look at over the last 12 months, we average it out and we say, okay, we made about 40, 000 a month last year. Let’s estimate that. Obviously, we want to make more, but this is what we’re going to set it at, and then if we are making more, we can obviously bump up that income goal, but that’s what we’re, where we’re at.

Now that you know what your income is estimated to be, you want to start categorizing and allocating all of your income and what you need to set aside. So, how much you need to set aside for taxes, how much you need to set aside for Your fixed costs your variable costs for growth anything you want to do You want to start categorizing and again, I do the same thing I take the average from the past 12 months for all of our expense categories and I say, okay Here’s how much money you spent on this last year Does this still align with your goals or is this something we want to pivot and kind of change?

Then you want to review it monthly so And it’s not just to review and saying, Oh, okay. I was on track here. I was off track there. I was doing this. I was doing no. You want to actually review it with intention. First of all, you want to make any adjustments that you need to make on a monthly basis. Second of all, you want to analyze it.

So let’s say you set a 500 budget in marketing and you went over by 500. So now you’ve spent a thousand dollars in marketing. It brought you to a negative net income month. You have a negative net income because you overspent that 500. You had the cashflow to support the negative net income, but you overspent.

During that specific month. Now you want to analyze that and say, okay, why did I spend a thousand dollars on marketing? What did that do for my business? Was it necessary? Was it helpful? If it was helpful, maybe you did make more income and that’s why you spent 500. But if that had no impact on your income, now you’re thinking, wow, was that 500 really worth it?

This is how this budget starts to transform your way of thought and your way of thinking. And it helps you to build your business. Again, like I said, a budget is not a thing. restrictive. It’s meant to be a guiding light. It’s meant to show you your business overall and help you build the business that you’re hoping to build.

Now there are some common budgeting mistakes that I want to talk about and how we can go about avoiding them. So obviously ignoring your numbers. If you just ignore them, it’s going to hurt you in the long run. I’ve said this a thousand times. I say it all the time on my social media. I say it all the time on here.

Your numbers tell a story and you need to learn how to read it. Now, if you’re someone who’s like, I’m not a numbers person, that is what me and my fellow bookkeepers are for. We’re here to help you understand them. We’re here to help you read that story. We want to Avoid overspending on shiny things. So don’t invest in tools or courses that don’t align with your goals.

Now that you have a budget, you want to think about things with intentionality. When you’re looking at this course online and you’re saying, oh my gosh, this course costs 500, but I only have a budget for courses of 250 a month, and I already have a course that costs 150. Can I afford this course? Is it going to align with my goals?

Is it going to help me further my business? This is when you start to key your brain into thinking about everything with a purpose. Now, obviously you also want to think about your pricing. You want to make sure your prices cover all the costs that you budgeted for and leave room for profit. Again, a budget is a great way to see this.

If you have your income and then your expenses and you’re like, I don’t know. I’m short. Like, I would like to put 1, 000 more into marketing, but I don’t have that 1, 000. Now you can say, is my pricing right? Is my pricing where I want it to be? And then of course, they, a common mistake is skipping savings.

You always want to pay yourself first by saving a portion of your income before spending. I’ve talked about this before in a previous podcast episode, but you need to pay yourself first, not last. You’re a business owner and not paying yourself is burning yourself out. You aren’t running a charity, you’re running a business and you as a business owner deserve to get paid.

So once you start to use a budget and you see the impact on a month over a month basis, you’re going to see this huge transformation. And it’s going to be so powerful because you’re going to feel less anxious and more confident about your money. Your decision making is going to become easier and you’re going to have that clear roadmap to where your business needs to go.

Now, when you spend 500 more in marketing, you’re going to be able to analyze that and say, Hmm, did that really pay off? And you’re finally going to have the funds to invest in growth, take a break, or just breathe.

Budgeting isn’t just about saving for stability or investing in growth. It’s about putting every dollar to work for you. By doing so, you’re helping build your business in a way that is intentional and will help you see where you need to go. It’s going to help you build confidence. It’s going to help you understand everything.

It’s just going to be so powerful.

📍 So as we close out this episode today, if you’re feeling overwhelmed, let’s connect to create a budget that works for you. What I do with my clients, like I said, is we work together, we look at their averages, we help them to create a budget that works for them, and we pivot, but we use that to analyze things.

It can feel really overwhelming if you’re someone who just doesn’t have the time to sit down and look at your numbers, but if you need someone to help, that’s what I’m here for. We compare your actual numbers with your budget, we go over why we overspent or why we didn’t. We really analyze everything to hopefully help you grow as a business owner.

Again, I want to remind you, thanks for hanging out with me today. Remember that every dollar in your business has a job, and we want to make sure that it’s helping you to build the business of your dreams. If you like this episode, make sure to share it with a friend, give it a review, and I hope to see you next time.

Until then, keep being creative. Farewell, fellow travelers.