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4 ways to budget without having money in the bank

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Jessica Miller-Merrell, blogging4jobs

It’s that time of year when sweat beads form on your brow as you sit down to prepare your budget for the next 12 months. For most people, it’s not exactly an exciting time but is accepted as a necessary evil to successfully run a business. There is, however, a select group of people that dread this time of year like they dread their next dentist appointment: those who must create a budget without actually having money in the bank.

It can be incredibly daunting to know that you must plan where the money will go without actually having the money in hand. The key to mastering the task is to be forward thinking and make use of a strategic plan. Before you get discouraged about your fingers-crossed budgeting, take a look at these four tips for successfully budgeting without having money in the bank.

  1. Forecast
    Budgeting with no money in the bank can feel like you’re playing darts while blindfolded but there is a valuable tool you can utilize to guide you. By forecasting, you’re taking some of the guesswork out of the process. The best way to forecast is to analyze your expenses and profit for the last three to five years. Doing so will provide you with a clear picture of what you can anticipate in the coming year and may even provide a close average of what your costs will be and what you will have in the bank at a later date.
  2. Get creative
    Sometimes when there is no money in the bank, you have no choice but to think outside the box. This could mean coming up with alternatives to spending money or could simply mean making the most of the money that is spent. When the budget is small, every dollar must do double duty and every person must play many roles. For instance, you may use employee profiles in your recruiting materials but also utilize the opportunity to be featured as a recognition tool internally. Every line item should be intentional and as multipurpose as possible.
  3. Operate lean
    It can be tough to make decisions that affect people’s livelihoods or workplace productivity but sometimes the difficult decision to cut people or things must be made. If your department or business is struggling or you know that there’s no cash now but there will be at a later date, those difficult decisions can pay off. It may be that the changes are temporary or they may prove to make sense in the long run, but when there’s no money in the bank, it’s often a logical next step.
  4. Underestimate and overestimate
    As you’re budgeting, both underestimation and overestimation is key; underestimation of the amounts you’ll have to work within and overestimation of expenses. When you underestimate the amount that you’ll have in your budget, it’s a pleasant surprise when what you end up with is more than expected and it’s much easier to adjust up than it is to adjust down. Additionally, there are almost always unexpected expenses that arise, so by overestimating your costs, you’ll be more likely to stay on budget when the unplanned happens.

What are your strategies for formulating a no-budget budget? Let us know in the comments below.

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