Managing Your Money
- Review your goals. Think about what you will need to spend money on to make these goals a reality.
- Be Realistic! Evaluate your expectations—can you accomplish all of your goals if your budget is limited?
- List all sources of Income. Income can be grouped into the following categories: Corporate, Foundation, Government, Individuals, and Other.
- List all Expenses. Expenses can be grouped into categories and subcategories depending on how large your project is. Some categories are Personnel (salaries), Occupancy (rent), and Other Expenses.
- Identify Fixed Expenses. Of your expenses, which ones are recurring and/or necessary? Example: Rent for office space.
- Identify any Variable Expenses. These are the expenses that can be cut back if you don’t have enough income. Examples: Postage, supplies, etc.
- Underestimate Income and Overestimate Expenses. Remember this strategy and you’ll find it easier to stay within your budget when you actually start receiving and spending money.
- Compare Income to Expenses. Total all sources of income. Total all expenses. Income – (minus) Expenses = Net Income.
- Adjust your budget until it balances. A balanced budget is created when Net Income equals $0. Do you need to reduce your expenses? Look to reduce the Variable Expenses first.
- Aim for a reasonable surplus. A 1-5% surplus is reasonable. Include a surplus in a balanced budget by listing the surplus under a “Contingency Expense” category.
- Reevaluate. Can you accomplish your goals with your newly created budget? Did you have to cut back on expenses? Revise and align your goals with your newly created budget!
