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Having and using a monthly budget is always a good idea, but it is particularly important as you graduate from chiropractic school and begin your new career.
Budgets are like exercise machines; they are often started but seldom maintained. Why not? Well, most of us are full of good intentions, but we get tired if things aren’t easy. But setting up and maintaining a monthly budget is not optional while you are in school and getting ready to start your practice. We’ll show you how to make it easier.
• As a student, you should keep your monthly expenses at the lowest comfortable level, so you can minimize student loan requirements and save some earned income for startup.
• As you start practice, you’ll need to stay with a budget so you can keep your withdrawals from the practice at a minimum, particularly in the beginning when you will probably be operating in cash flow deficit.
• Guilt-free Budgeting” Budgeting tools:
• Making a Family Budget,
• Living a Better Life: The Free Money Saving Tips Ezine, Budgeting Tools & Calculators,
• Free household budgeting work sheet,
Commerce Clearinghouse has several tools that can help you with setting up and maintaining your monthly budget:
• Family Monthly Budget Worksheet
• Home Budget Calculator
When you use this calculator, remember to include:
• Monthly payments on your student loans,
• Malpractice insurance, if you are an employee and expected to pay for your own (If you’re in your own practice, this cost is a business expense);
• Health insurance for you and your family. Even if your practice has a health care plan, this cost will probably not be covered completely by the business;
• Other sources of income: your spouse’s income, any salary you will be taking from your practice, if it is incorporated, income from investments or from alimony/child support.
Finally, a word of advice from a very wise chiropractor:
DSATM – Don’t Spend All the Money!
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• As you prepare your business plan, you’ll need to include the amount necessary for you to draw out of your practice to live on each month (your “draw”), if you are a sole proprietor, or the amount you’ll need as a salary, if you are incorporating.
• When you go to a bank looking for a startup loan, the bank may ask you for your monthly budget information.
• If you are working as an associate or independent contractor, you must know the minimum you will need to live on, so you can negotiate your base salary.
Your budget should be easy to use. We’ve listed links to online Excel spreadsheets you can use to set up budget amounts and input expenses and income (see the Resources section). Here are some suggestions for keeping things simple:
• Have as few categories for expenses as you can get away with. The fewer the categories, the easier the decisions. For example:You can lump lots of stuff into “miscellaneous” expenses.
• Include a category for “unexpected” expenses, and keep a little money in your checking or savings account for these things (repairs, for example)
• Don’t underestimate expenses. The reason most people don’t stay with budgets is that they forget two major categories: miscellaneous and fun. If your budget doesn’t include some money for fun (eating out, small indulgences, or movies, for example), you won’t stick to it.
Similarly, not setting aside enough for miscellaneous means you won’t be have enough to pay for the small unexpected purchases that come up (over-the-counter medicine and tissues when you are sick or the underwear you forgot to pack when traveling, for example).
• Get into the “budget habit.”
Some additional suggestions:
• Use duplicate checks! They cost a little more but they save lots of time and frustration trying to figure out what that check was for.
• Set a jar or container in the kitchen or on your bedroom dresser. Put receipts in here and enter them in your worksheet at the end of the week.
• Pay your bills online. Use billpaying software or your bank’s free billpay service to schedule and pay bills. Not only do you get the benefit of saving on mailing, but you also get a record of bills paid.
• Set aside a time each week to catch up on your weekly expenses and enter them into your worksheet.
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