Cash Budget Challenge: 60 Days to Smarter Business Spending

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If you’re a regular reader of Careful Cents, you already know how important it is to get out of debt and keep track of your personal finances, so you can achieve your business goals — like quitting your job, traveling more, and generally having more freedom.

But have you ever thought about how important those things are to the success of your business too?

I admit, in the past year of being my own boss I didn’t pay as much attention to my business finances as I did my personal.

Why? Mostly because I thought every business expense I incurred was an “investment” into helping the business grow. But now, over a year after quitting my job, I’ve begun to see how reckless that point of view can be.

Is my business going broke?

In July 2014 my business credit card balance was over $3,000. I know, scary right?! Although I swore off going into debt again, I admit that I’ve viewed my business credit a bit differently.

Up until the last few months, I’ve been able to pay off my balance every month as the bill came.

CITI credit card balance
Business credit card balance as of July 2014.

I mean, expenses like buying a copywriting course, hiring a new team member, or paying a web designer, are worth the investment, right? I don’t know why that’s my mindset, but it is — and I’m quite embarrassed to admit that.

I honestly think I was just hoping to give my business a fighting chance to grow, without going about it the slow — but smart — way. 

Building a business takes time, and you can’t rush it! 

So in an effort to reign in my business spending and get back on track with making smart, financially savvy decisions, I’m attempting a 60-day cash budget challenge over the summer.

And I’m inviting you to join in!

What is a cash-only challenge?

For the next 60 days (or however long you want to) you and I are only allowed to use cash, or a direct debit from our checking account, to pay for business expenses. Deal? Deal. At the end of the 60 days, I hope that we both not only reach our goals but exceed them!

Here’s a few of the goals I have planned for the challenge:

  1. I will pay down at least $1,000 off my business credit card balance
  2. Increase my income by $500 a month
  3. Create better ongoing spending habits

You can hold me to it!

If we want our businesses to be successful, we have to spend less than we earn — just we do with our personal finances. Being a creative business owner is tough, but with the support of the this community, we can do it together!

There are three methods you can use over the next few months to participate in the cash budget challenge. Think of these as a type of ground rules for business spending so we keep ourselves (and our businesses) accountable.

However, you’re welcome to use any or all of the methods listed!

1. All-cash budget

Simply put, an all-cash budget means that at the beginning of every month (or when you get paid) you take out the cash you need to pay for any upcoming business expenses.

This can include things like client lunches, drinks or snacks when working from a coffee shop, office supplies, books, local meetups and the like.

Of course, this makes it difficult to purchase any courses or products online, or to pay team members or clients you work with virtually, but if your business can handle it, then the all-cash budget is for you!

2. Direct debit

To remedy the issue with using cash when you need to pay expenses online, it’s totally OK to pay with your debit card or use a direct debit from your business checking account.

You can mix this with the all-cash method or just use your debit card/bank account in place of your credit card.

Just make sure when you pay anything via PayPal, or other online payment software, that you only do a direct debit from your checking account. No cheating!

3. Pre-paid debit card

This option was suggested from Mandy, who’s a member of the Careful Cents community. She uses a pre-paid debit card that she loads funds onto at the beginning of the month, to pay business expenses. Then when the funds run out, there’s no room for overspending.

This is a great solution for specific expenses as it functions much like the cash envelope system, but with plastic instead. I know several community members think that carrying around a wad of cash is a bit dangerous, so this is a good alternative.

So here’s what to do to start your own cash-only challenge:

  • Pick your budget method (cash, debit, or pre-paid card)
  • Copy and fill in the business budget spreadsheet
  • Start spending only using cash or debit for the next 60 days

This challenge starts right now, at the very beginning of summer. The next few months will go by any way, so why not make them really count?!

Join the 60-day cash budget challenge and start spending smarter, so you can really enjoy the freedom of being the boss.

Then, check-in with my progress over the next three months.

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Tired of feeling like your business expenses are out of control? Here's how to put your business on a cash-only diet for the next 60 days. Future you will thank you!