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Consider these three things before you add an expense to your budget

by , 08 October 2014
For your budget to be effective you need to be strict with what you add to it. If you're not, then it won't help you control your spending.

But sometimes urgent expenses arise and you can't do an expense trade-off to fit them in.

This means you'll have to add it to the budget and go through the process of adjusting your budget so you still come out with a profit.

But before you do this, you need to determine how necessary it is.

Consider these three things to help you determine its necessity...

 

When determining if you must add an expense to your budget, consider this

 
1. The importance/urgency
You need to determine just how important or urgent it is that you spend that money. For example, if a pipe in your office bursts you need to fix it A.S.A.P. This is an extra expense you can't put off because a burst pipe could do serious damage to your office equipment.
 
If an expense isn't urgent, consider putting it off until the next month.
 
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2. The nature of the expense 
What is the expense for? Do you need to pay that expense to run your business or do your work? The nature of the expense will affect its importance or urgency.
 
Expenses of an entertainment nature, such as urgent client lunches, aren't worth adding to the budget because you can simply ask your client if you can meet at your offices or theirs.
 
3. The size of the expense
If the expense is a lot of money, you need to think twice about adding it to your budget. Accounting for an expense like that in the middle of the month when you haven't budgeted for it could leave you with a financial loss. If it's not important, rather leave it until you can budget for it.
 
Considering these three things can help you make wise decisions when it comes to your company's budget.
 
For more help with your budgets, check out the Budget Master Series
 


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