When you’re going to a new destination, you use a navigation app like Waze. Your financial goals are just like that new destination – you’re not quite sure how to get there. So how can you navigate towards achieving your financial goals? You set-up and follow a budget. Your budget is your Waze App (a.k.a. Road Map for most over 50) to finding your organization’s financial destination (a.k.a. your goals).
A budget navigates your organization toward achieving Three Financial Goals:
- Immediate Needs
Identify the amount of income and expenses that you expect to receive and pay out for the year to operate your organization. Build the budget line-by-line, carefully considering the reliability, amount, and timing of each item. Start with income and expenses for which a contract or agreement is in place. Include other items based on their likelihood to occur and your organization’s track record. Be realistic and document any assumptions that you make.
Beyond the day-to-day operations, you need to invest to keep up with technology or replace equipment that has reached the end of its useful life. Assess the condition of your vehicles, computers, and other property that you depend on to manage your operations, data, and communications. Determine what needs to be replaced, when, and the cost. Any replacements that don’t fit into the current year’s budget should be included next year, or in the future.
- Future Growth
Growing your market, programs, or services takes money. Budgeting is a thoughtful process that helps you plan for growth and funding. Budget time is when you assess your current financial scenario and previous track record, and plan your future. It’s the perfect time to weigh the costs and benefits of growing, and determine how to fund those costs. If those costs exceed what you can fund yourself, does borrowing or bringing on an investor make sense?
You wouldn’t drive to a new destination without a navigation app. Why would you navigate your organization toward its financial goals without a budget? Developing a budget and using it as a navigation tool will help your organization stay on track to achieving financial goals for immediate needs, infrastructure, and future growth.