Budgeting against your goals throughout the year

This post was in partnership with Wells Fargo. Originally posted on Wells Fargo Works.

One of the more challenging aspects of running a company is determining how to best allocate the company’s revenue according to a budget. Oftentimes, a company will begin the year with one idea and, midway through, realize that they want to take a different direction. This can lead to uncertainty about how to best manage cash flow and how to adjust projections. 

The key with business budgeting is to always remember that a budget is a fluid document. It’s merely a guide for you to use to determine your next best move, and it is OK to adjust it throughout the year. 

Estimate your annual budget

When you’re creating your annual budget projection, you may want to consider applying the 60/20/20 rule. Generally speaking: 

• 60% of revenue should be used for fixed expenses. This includes salaries, overhead expenses, reserves for tax payments, and the company’s profit goals. 

• The first 20% should be dedicated to growth. This may include investing in marketing, advertising, and other initiatives to expand the company’s brand and reach. 

• The second 20% should be designated for internal development. This could include R&D for products-based businesses or training for staff members to improve their skill sets and leadership abilities. 

Create quarterly budget goals

Every 90 days or so, you should aim to check in on your annual budget projection. To help with this, you also need to create four separate quarterly budgets. When planning your quarterly budget, work with your team to decide on the number one objective for each quarter. It could fall under one of three categories:

• Growth: Pushing your business into a growth phase 

• Stability: Remaining stable and consistent 

• Research and Development (R&D): Increasing your service level with an advanced technology investment or internal team training 

RELATED: Need help setting financial goals for your business? Expert Ellen Rohr is here to help.

Adjust based on your needs

Keep in mind that the 60/20/20 rule is a guide. Depending on your quarterly objective, you may need to tweak these percentages. For instance, if you are developing a new product to bring to market, you will likely need to increase the percentage dedicated to internal development, and decrease your funds allocated to growth. 

Once that product has been created and is ready to go to market, you may reduce the amount devoted to R&D from perhaps 30% or 35% back down to 15% or 10% and re-allocate the remaining funds to growth. At this point, you might consider increasing the percentage of revenue dedicated to growth to 30% or 35% in order to pay an outside branding consultancy to help you package and position the product, work with a marketing agency to help you spread the word, and later work with an advertising agency to help you increase sales. 

If you are a service-based business, you may decide to focus on developing your staff at a specific point in the year, which will increase the amount of money that the company is using for internal development. 

The key to business budget planning is flexibility when it comes to your objectives and quarterly budgets. This will help drive your budgeting decisions and keep your business on track. 

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The secret to paying off your debt faster

If you are like the majority of Americans, you have a mound of debt that you are eager to pay off. In fact, the New York Federal Reserve released a report that the total household debt for Americans reached $12.73 trillion in 2017, surpassing the 2008 peak. Yikes!

From student and auto loans to credit cards, the increasing level of debt is a source of anxiety for many. According to the Prosper Marketplace Financial Wellness Survey, 44% of Americans rank debt relief as a top priority for improving their financial standing. Companies like Prosper can help you get your finances back on track by consolidating your debt, so that you can sleep better at night.

Paying off your debt is one of the first steps to achieving financial wellness. And while we all know to spend less than what we earn in order to pay off our debt, it may often feel as if this is easier said than done. As a financial coach, I have worked with hundreds of individuals and have helped them pay off nearly a half million dollars in debt.

One of my clients had over $70,000 in debt that she had been accumulating over the past fifteen years. Within one year of working with each other, she was able to pay it all off. We did this by slightly increasing her earnings and, more importantly, we worked on shifting her mindset. Because when it comes to finances, there is a little known fact that most financial advisors may not have shared with you. In order to experience a shift in your financial situation, you must have a mindset shift, first.

No matter where you are on your financial journey, it is important to remember that having a positive mindset is the key to getting to your next stage of financial wellness. And who better to know the connection of a positive mindset and financial wellness, than Oprah Winfrey.

“The great discovery of all time,” Winfrey once said on her TV show, “is that a person can change his future by merely changing his attitude.”

And sometimes, as Winfrey says, it’s our own mindset that’s blocking the path forward.

When we have debt that continues to haunt us, we become frustrated and often spiral into negative thinking. You may say phrases such as “I am bad with money” or “money doesn’t grow on trees” or “being broke is just the way my life is”. These thoughts turn into beliefs that are sabotaging your ability to pay off debt.

Imagine that you were talking to a young child and trying to teach her how to do long division. The first few times, she may get the answer wrong or take a long time to figure out how to do the problem. Would you yell at her to hurry up? Or tell that she is stupid for not getting the problem right? Of course not! You would gently show her a few mathematical short cuts. And encourage her by saying that she is smart and good at math. Why? Because no one is motivated by shaming or negative talk.

The same holds true for you. In order to pay off your debt, you have to encourage yourself throughout the process. You are not doing yourself any favors by beating yourself up and having negative thoughts. The key is to remain positive and become your own biggest cheerleader.

As you work on paying off your debt, here are five steps you can take to improve your money mindset.

Step #1: Write down all of the money mistakes you have made on a sheet of paper.

Step #2: Grab another sheet of paper and write "I forgive myself for ..." followed by each mistake.

Step #3: Go to a mirror and read the second sheet of paper out loud to yourself. Look yourself in the eye as you say, "I forgive myself for..."

Step #4: And then, tear each sheet of paper into a million pieces. Because the past is over. And now it is time to move on...to a much brighter future.

Step #5: Repeat these steps daily until you pay off your debt.

Now we'd love to hear from you! Is paying off debt one of your financial goals? If so, why is this important to you? Leave us a comment below.

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This post was sponsored by Prosper.

Our Top 5 Favorite Bookkeeping Apps for the Independent Woman

Oh, bookkeeping. The bane of every business owner's existence. 

But, we all know that keeping track of our monies is the secret to leading the carefree, glamour-filled lifestyle. As an independent woman, it is imperative that we know how to manage our books. And not end up in a BBHMM situation like Rihanna did with her CPA firm. More about that, here.

Often times, business owners wait until tax season to start thinking about their books. Leaving you in a frenzy trying to figure out where the receipt is for that random $87 charge way back in the month of the May. 

Do your tax accountant a favor this year and let's burn all of the shoeboxes. Get a jumpstart on organizing your books by using an online program. Not only does this make filing super easy peasy, it also helps you stay on top of your finances throughout the year during your weekly money dates. 

Here is a list of the top five bookkeeping programs that I love for the independent woman.

1. Quickbooks Self-Employed - a fantastic tool for freelancers and independent contractors. Best feature: Love that it automatically calculates your quarterly taxes, and allows you to send invoices on the go. Downside: customizing your invoices is very limited, which we know is important to our creative friends. Cost: Starts at $10/month and goes up to $17/month.

2. Freshbooks- great tool for the self-employed and project-based businesses. Best feature: hands down the best invoice customization tool on the market. Downside: the financial reporting is limited, which may be an issue as you grow your business. Cost: Starts at $15/month and goes up to $50/month

3. Xero Tax Touch- known as beautiful accounting software, this program's design is really easy on the eyes and geared towards freelancers/independent contractors. Best feature: easy-to-read report on your income, expenses and how much taxes you owe for the year. Downside: no invoicing capability, which is a huge downside for the woman on the go. Cost: $6/month

4. Sage One- geared towards the small business owner on the go. Best feature: great inventory tracking capabilities. Downside: this product is a little too robust for the freelancer or independent contractor, and therefore not very intuitive. Cost: $25/month

5. Kashoo- named the #1 accounting app on the iPad and really great for the traveling business owner. Best feature: works offline so you can access your data even if you are out of internet range. Downside: similar to SageOne, not necessarily an intuitive program for the freelancer or independent contractor. Cost: Approximately $17/month

And now we'd like to hear from you! Which accounting software do you use for your business and why? Leave a comment below.

For more accounting tips for the independent woman, be sure to click here and join our weekly newsletter.