The Need for a Personal Budget

A new year means a fresh start for many, which could include taking a fresh look at your budget.

Money & Credit

The Need for a Personal Budget

The new year is here and with it comes resolutions and new expenses. Are you planning on saving more money?  Taking a trip?  Doing a home improvement? Maybe that includes taking a fresh look at your budget - especially your personal budget. Here's what to consider and some resources to help.

Everyone knows the importance of having a budget for your practice, but having a personal budget is equally important. While we have talked about what should be considered in building a personal budget before, we thought it was important to revisit the how and why of a personal budget.

Consider this: you have a budget for the office so that you can plan future expenditures, see your spending habits and so much more, so why wouldn’t you have a personal budget?

A personal budget is particularly important as you open your practice. You’ll be accumulating a number of expenses professionally, and you may lose sight of your personal expenses.

The key to a successful budget is being realistic.

Make sure you look closely at your fixed expenses, average those that aren’t, and make sure your discretionary spending is realistic. This means if you are stopping to get a latte on the way to work or eating out every day, make sure you plan for it.  And, don’t think you’ll start cold turkey and quit the spending pattern.  You’ll just be setting yourself up for failure by breaking your budget.

Also, look to boost your savings.

Most of us are pretty good at saying we’ll start saving soon, but it becomes easier if you plan to set aside a sum of money each pay period.  Even consider having a portion of your of paycheck automatically deposited in a savings account, so you don’t have to remember to make the transfer.

And, even if you have established a personal budget, it is important to revisit it periodically.  Things change.  For example, you may note a change in discretionary spending, or you may not have accounted for the annual increase in your utility bill.

Ultimately, by following a budget, you’ll have a better understanding of where your money is spent and will likely have more money available to do what you want.

If you need help getting started, check out Mint, SCORE or the Small Business Administration to find templates. Your accounting software might also have a budgeting function.

The information in the NCMIC Learning Center is offered solely for general information and educational purposes. It is not offered as, nor does it represent, legal or professional advice. Neither does this information constitute a guideline, practice parameter or standard of care. You should not act or rely upon this information without seeking the advice of an attorney familiar with the specific legal requirements of the state(s) in which you practice. If there is a discrepancy between the site and an insurance policy you have with NCMIC, the policy will prevail.