Setting Income Target
You’ve finished your business plan; it’s clear concise and ready to go. You are now onto the real fun of starting your business, the reality check. A reality check is the process of determining if you can actually live the lifestyle you want to live or if you need to limit yourself to more attainable goals. “Happiness is not in the mere possession of money, it lies in the joy of achievement, in the thrill of creative effort.”-Franklin D. Roosevelt. It’s a great feeling to do your job well and be recognized for it. With smart financial planning you will reap the rewards of a job well done and a little something fun for the weekend!
Lets talk numbers. To begin your personal business plan you need to be able to create a basic personal budget. First, you need to itemize your net income. Your net income is the amount you take home after paying taxes such as social security, FICA, and any contributions to retirement plans. In contrast, your gross income is the total amount you earn without deducting taxes or contributions to retirement plans.
First, determine your monthly net income-paycheck, financial aid, other income. Second, make a list of all your monthly expenses- rent, utilities, insurance, groceries, and various other living costs. Finally, calculate the percentage of income spent each month.
MONTHLY EXPENSES/MONTHLY INCOME=PERCENTAGE OF INCOME SPENT
Being able to calculate the percentage of income you spend each month is an important first step to building your own business. It takes time to build up a profitable monthly revenue stream so during the start-up phase every penny counts. Because you are so busy it is important to bring personal discipline to budgeting – that way cash flow can be managed – Cash is King! The lower the percentage, the better! We all like to make money, don’t we? Being smart in your business means being smart financially. “ Money is good for nothing unless you know the value of it by experience.”-P.T. Barnum. Know the numbers and stay on top of them every month, week, even day. When you budget yourself well, you will excel.
