I once pulled out a baby tooth, despite the fact that it wasn’t ready to come out, just to get a dollar. I had run out of birthday money and really wanted the latest Polly Pocket.
A few years later, I found myself $300 in the red after losing many, many games of darts to my younger brother. I should have quit after the third game but I couldn’t stomach the thought of losing and felt double-or-nothing was the best approach. Naturally, this ended with me sobbing and nursing an over-worked right arm.
During a semester abroad in England, my housemates and I searched under couch cushions, through purses and in backpacks, trying to scrounge up enough change for one of the girls to ride the bus to school. Between the seven of us, we couldn’t come up with two pounds.
Although my formative years were defined by spending money as soon as I got it—and not having it when I needed it—once I started making my own money, I also started making a budget.
Doing so is about as exciting as, well, reading a blog about a budget—but it’s a must. Whether you’re a 20-something trying to save money, or an apartment owner trying to bounce back from the recession, it’s all about the Benjamins.
But where do you even begin?
In the article “Sharpen the Mind Then Sharpen the Pencil” in the August issue of units, author Reuben Berman says owners must first determine whether they need a normal budget or a “stretch” budget.
Now, this doesn’t mean you should opt for the stretch budget every year and go wild. I’d love to buy a shopping cart full of Taylor Swift dresses from Ross each summer (I have cheap taste) but such spending should be reserved for the occasional year when I must spruce up my wardrobe. When I am 35 and unmarried is an example of such a year.
When determining what type of budget is most appropriate, Berman says it’s important to have next year’s goals in mind and communicate them with onsite staff to ensure everyone is on the same page.
Also of note, Berman says owners shouldn’t automatically increase expenses every year by 2 percent or 3 percent across the board. A budget should be written from the ground up and include detailed, legitimate reasons for changing historical numbers.
If your budget for the annual holiday party has remained the same each year and you suddenly want an extra $1,000 for a fog machine and an appearance by a reindeer, you better be able to justify it.
Once the hard work is over, the fog machine is nixed and the budget is finalized—taking into account other factors such as utility costs, revenue metrics and historical operating trends—owners need to actually use it. You didn’t lose a month of your life to spreadsheets just for giggles, so stick to what you so carefully created.
In keeping with Berman’s advice, I will patiently wait until 2022 for that Ross shopping spree.
For more on writing an operating budget, check out the August issue of units, which mailed Aug. 8.
What are you budgeting more for this year? E-mail email@example.com