From the desk of Shawna Aho, CEO of STAC Bizness Solutions
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To end the year, I’m going to switch gears a bit and get personal. After all, a big reason you decided to start a dental practice and work hard each day is to provide a comfortable life for you and your family. In this post, I want to share a few tips on how you can leverage the business best practices you follow each day (or at least I hope you do 😊) to positively impact your personal financial habits.

Let’s start with a question… If a fellow business owner said to you that they run their business without a budget, what would you think? Would you think they were incompetent? Or perhaps lazy? Or both?

But what do most families do?

When you think about it, a family is actually a “mini business.” There is income, there are expenses and there is, hopefully, something left over to invest and to enjoy.

So why don’t most families operate on a budget? After all, a personal budget helps you to see your financial direction and helps you stay (or get back!) on track. It’s a great comfort. 

One reason some people don’t put together a budget is a feeling of overwhelm, of being too busy, of feeling like life is too complex to keep track of all those details. Well… if you feel this way, it’s your lucky day.  Budgeting for your family is not all that complex and we’re going to walk you through it step by step!

But before we look at the “how” aspects let’s consider 3 important reasons why a personal budget is such an important tool to help you achieve your financial goals and dreams.

1. Most of your money is already spoken for long before you get it

The money you earn has already been promised to keep the electricity on, make the loan repayments and pay for the insurance. Most of what many people think of as budgeting is really honoring the commitments you have already have.

Now since we are all honest people and plan to pay these bills, the first step is to track these bills and see what is left over for your day-to-day living.

 

2. Your day-to-day living money is spread all over the place…

Some of your day-to-day living money is in the bank. Some is in your purse or wallet. Some is with your partner or children if you have them.

You need a simple system that allows you to track day-to-day expenses such as fuel for your car, shopping and your discretionary spending expenses.

We suggest you don’t attempt to keep track of every cent of your day-to-day living money. It’s not worth the effort for the benefit you’d get out of that level of detail. Instead, you need to identify your main day-to-day expenses and make allowance for all other minor day-to-day expenses as a total expense.

Here’s a key: You need a system that is so easy to use that you keep using it. You can track these day-to-day expenses by entering them into a spreadsheet, or better yet, use a tool such as PocketGuard or QuickBooks Online Simple Start that can automatically pull in bank feeds to save you a lot of data entry.

 

3. The Number 1 reason people give up on their budgets? ATTITUDE!

It’s ALL in the attitude! 

Have you ever attempted to budget and given up in frustration? What is the reason your budgeting attempt failed? What will make you stick to it?

Think about this…one of the top reasons—if not the top reason—so many people give up at budgeting is attitude. If you think of it as a penny-pinching sacrifice instead of a means for achieving your financial goals and dreams, how long are you likely to stick with it?

It’s like the difference between going on a diet and eating healthily. One is negative and restrictive; the other is positive and allows you to indulge every now and then and still achieve your goals. To increase your chances of success, work on your attitude first.

Many people refuse to budget because of budgeting’s negative connotation. If you’re one of them, try thinking of it as a ‘spending plan’ instead of a ‘budget’. Once you’ve attempted to budget and failed, the bad feelings associated with any type of failure can keep you from trying again. Don’t give up!

The cold hard reality

Let’s face it. Money is a tool that enables you to reach your goals in life. But the cold hard reality is that until you know where your money goes, you can’t make conscious decisions about how to use this tool effectively.

A budget (or spending plan!) shows you exactly where your money goes and provides a clear plan that lets you save for the things that are important to you: a new house, a new car, a comfortable retirement, funding your child’s education, high quality health care, travel, or whatever your particular goals and dreams happen to be.

And that’s exciting!

Whatever YOU decide you want to save for and achieve, you can. With the right attitude, focus and a (spending!) plan.

 

4 Steps for effective personal budgeting (spending planning!)

Now let’s look at the mechanics of making this all happen.

1. First, it’s important to gain an accurate picture of your overall financial situation. This includes assessing your income, fixed expenses (such as mortgage, utilities, and loan payments), and variable expenses (like groceries, entertainment, and dining out). Understanding these aspects provides a foundation for creating a realistic budget.

2. Next, prioritize your financial goals. Whether it’s saving for emergencies, paying off debt, or investing for your future, identifying and prioritizing your objectives helps allocate funds accordingly. Establishing short-term and long-term goals provides motivation and direction.

3. Once your goals are set, create a detailed budget that allocates specific amounts to each expense category. Be realistic and leave room for unexpected costs. Tracking expenses closely is crucial to assess your spending habits and adjust the budget accordingly.

4. Regularly review and update your budget to reflect changes in income, expenses, or financial goals. This flexibility ensures the budget remains relevant and achievable over time.

Remember… aside from ATTITUDE, discipline in adhering to your budget is perhaps the most important aspect of all. This involves making conscious spending decisions, avoiding impulsive purchases, and staying committed to your financial goals.

Once you start budgeting with a positive attitude, you will see the difference a budget or spending plan can make in your life.

Sure hope this helps!

Until next time…

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    There’s no denying it. Creating a thriving practice is about much more than practicing medicine!

    Topping the list of “other” priorities is your practice’s financial management. In this short guide, the experts at STAC Bizness Solutions outline 7 financial best practices that differentiate struggling practices from those which are highly profitable and experiencing healthy levels of growth.