How I Budget My Money
Step 1: Create a Budget Plan Based on Percentages %
Percentages are scalable. Whether you make $1k or $8k, the percentages do not change. It is wise to create habits that are based on percentages and not dollar amounts.
When you make money, simply calculate the % of the money made…and you’ll know exactly where it should go.
This helps to create solid habits and is easier to change. It’s easier to change percentages than exact dollar amounts.
Step 2: Define Your Categories
Taxes = money set aside to pay taxes. Always prepare for the worst. We do not want to be in a position where we can’t pay for your taxes.
Tool Upgrades = new clippers, educational workshops, tickets to expos, Illuzien capes…anything that feels like we are leveling up, but also investing in our craft/skills/business.
Expenses = booth rent, marketing, Barbicide, towels, anything that is a necessary business expense. Expenses are not always bad…remember. they are write-offs!
Savings/Emergency Fund - the pandemic taught our industry that we need to have emergency money to keep ourselves afloat when we can not cut hair.
Salary = the money to live for life outside of work.
Step 3: Establish a Bookkeeping System
Create a simple spreadsheet to keep track of your business expenses and your income.
Let’s be honest. Barbers can be known for spending a lot of money. We drop $500 at the local supplier every time they drop by the shop. We drop at least $200 on Illuzien’s Capesgiving. Don’t get me started on money spent on food.
Keep track of the money you spend. We need accountability. We need to know where our money is going.
Step 4: Do Monthly Budget Reviews
At the end of each month, do a monthly review. Be brutally honest.
How much money did I make?
How much money did I spend
How much money did I save?
Am I on track to meet my goals? If no, why? What is going well? What could be going better?
Who can help me make adjustments?
Is there anything I need to learn to help me?
Step 5: Name Your Goals
Bookkeeping and budgeting isn’t very sexy, but achieving your goals? That is!
Remember to remind yourself of the Big Picture.
Ask yourself: What am I trying to accomplish? What is my Big Goal?
Some call this exercise “Know Your Why.” When you intentionally name your goals, it will give you the motivation when the journey is hard.
