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Budgeting for Success

Bench Racing

by Ryan King

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Hobbies and projects regularly fail, and for various reasons, but one of the most obvious is money.

The best way to keep your project or hobby on track is to actually track the money, but how?

One of the key tenets of management is control, and in order to control, you have to have a quantity or quality with which to compare your results to. The way money is controlled is to a standard called a budget.

While I'm not going to explain how to draw up a budget here, I will explain some concepts that go into one.

First of all, a budget is often done on a yearly basis — meaning that through estimation, a budget is drawn up. There are numerous types of budgets, but to keep this simple, lets concentrate on what is known as an operations budget and its two major components: an income budget called a sales budget, and an expense budget.

In order to make a budget work for your hobby, you have to estimate out how much you can budget from your income and how much you will need to spend to achieve the work you want to accomplish in a year's time.

By comparing the one against the other, you can keep track of where you are, where you should be, and make any needed adjustments to keep yourself from suffering under over-spending and possibly wrecking your hobby beyond your ability to remedy without losing it.

All of that, of course, means you will need an accurate personal budget to know what you can afford to provide for your hobby, but that is both the gist of what budgeting is and the important role it plays in the success of your hobby.

For more on budgeting basics and how they relate to running an enterprise you can check out the the Complete Idiot's Guide to MBA Basics, Third Edition by Tom Gorman, Business Studies for Dummies, and the Complete MBA for Dummies, Second Edition. For more in-depth analysis, there are a host of accounting and personal finance books available that can help steer your hobby in the right direction.

Ryan

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