Budgeting Advice for Up and Coming Entrepreneurs

Posted: 07.16.2019
As an up and coming entrepreneur, one of the most invaluable skills you can master is budgeting. Knowing how to keep your business books and personal finances in order could mean the difference between success and failure. Below, you’ll find some budgeting tips put together by Castle Finance as well as information on loans in case you end up needing one.
 
Budgeting
 
Before you can learn how to successfully budget, you’ve got to first know what budgeting actually is. It’s essentially a list of your incomings and outgoings. A budget has multiple purposes, and one is to help you know where your money is going. Another purpose of a budget is to help you save money or work towards a financial goal.
 
Now that what budgeting is has been established, here is how you can budget.
 
Add Up Income: To begin with, you want to calculate your income. Make a note of every source of income that you have as that will be used to draw up a budget. Aside from your wages, write down any other income sources like pensions, benefits, and any residual income you get.
 
Draw Up Expenses: After you’ve determined your income, you’ll need to make a note of what your expenses are. Include recurring expenses, such as food, household bills, subscriptions, insurance, and anything else you spend money on. You’ll also want to break down any infrequent expenses like vet visits or car repairs by dividing them by twelve, so you can use the monthly figure.  
 
Calculate Both: Once you’ve written down all of your expenses, you can go on to subtract your expenses from your income. What this will tell you is whether you have a surplus or deficit budget. While a ‘budget surplus’ is when you have money left over after paying for everything, a ‘budget deficit’ is when you are spending more than you’re making.
 
Loans
 
Loans are another part of finance that you may have to include in your budget sometimes. For this reason, you should know as much about them as possible, especially before taking one out.
 
One of the first things you should educate yourself on when it comes to loans is how a loan works. The terms tend to be agreed on by both parties in the transaction before anything is exchanged. All details should be ironed out like the length of the loan and interest that will be charged.
 
Once you know how a loan works you’ll need to think about the type of loan you want to take out. You could decide to settle for a secured loan like a car loan or mortgage which uses collateral. Alternatively, consider an unsecured loan like a credit card, but this tends to have higher interest rates.
 
Credit cards are also referred to as revolving loans as they can be spent, repaid and spent again. Term loans like mortgages, however, have to be paid off in equal monthly instalments over a fixed period.
 
It is also important to note that the higher the interest rate is, the more you’re likely to pay on a monthly basis. If the loan had compounded interest which means you’re paying interest on interest, then you’ll end up paying even more. However, with a simple interest rate, you just pay interest on the principal loan.
 
For more information on budgeting or loans, reach out to Castle Finance on Linkedin.you’re likely to pay on a monthly basis. If the loan had compounded interest which means you’re paying interest on interest, then you’ll end up paying even more. However, with a simple interest rate, you just pay interest on the principal loan.
 
For more information on budgeting or loans, reach out to Castle Finance on Linkedin.

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