We invited Michelle House from Secretbudget to give us the lowdown on the benefits of preparing a budget and how to do it. Here is what she had to say:-
The top 3 benefits for a community organisation to do a budget are...
- You have direction and focus.
- You can apply for grants and other kinds of funding.
- You’re being good stewards of the money from the community in the form of membership fees or hard earned fund raising dollars.
What is a Budget?
A budget is a plan, a goal. It’s a monitoring tool for your finances. Most budgets cover a 12 month period and are broken down into income and expenses. Some software programs have a budget section built in, some use a spreadsheet. When it comes to the end of the first month of operating, have a look at your budget and do a comparison. Determine what was over and what was under or if using a percentage, where the budget is tracking based on when the expenses and income are come in during the year.
Why do a Budget? - My three P’s; Planning – Preparation – Prosperity!!
The idea of doing a budget is so you can see more clearly and plan for the year ahead, it’s a way of thinking ahead, financially. You need to predict your income and expenses for the year to ensure that you are staying above the line and finishing with a profit (or surplus) for your community organisation! It is also a great tool to have on hand for any financial assistance you may need to apply for. It demonstrates that you’re serious and that you have a plan/goal in mind!
When do you do a Budget?
Prepare the budget to present at the first or second meeting you take over as treasurer or the first meeting in the new financial year.
Who prepares the Budget?
I have run businesses since I was 22 and I find that it’s always a great idea to have one person who is accountable for the budget. The treasurer would hold this responsibility but I would base it on discussions with all members of your committee about plans for the year.
How do you do a Budget?
- The first place to start is with your expenses. Gather the previous 12 months bills/invoices.
- Predict income. Use last year’s income and discuss how this will improve.
- Alternatively, use the Statement of Receipts and Exenditure from the previous financial year to give you an idea of how thing ran in the previous year.
With these figures in mind, amend the amounts based on the committee’s plans. Eg. Is there some equipment your club or association needs to purchase? What fund raising are you planning to do?
My best tip – Reduce expenses by 10%, increase income by 10% and you’ll be up 20%!!
Michelle House is bringing up a young family and manages the finances of a family business in property maintenance. She has also become well known as a budgeting expert, thanks to the creation of her practical budgeting tool called the ‘Personal Budget Organiser’, or PBO. The PBO works as a portable filing system within a wallet – perfect for organising money, receipts, or anything that will help you budget. Teaming her product with a useful website, http://www.secretbudget.net/, Michelle hopes to inspire Australians to ‘get back to basics’ with their understanding of expenditure and money.