As we work to create a better future – a better “normal” – it’s time to talk about everyone’s favorite topic (or maybe not) – money! Whether you love budgeting or loathe it, it’s one of those necessary tasks that I would guess you do each year during your company’s budget season. How we spend money shows what we value, so it’s important to know how to create a budget that aligns with your purpose.
First, let’s recap what we’ve discussed so far. We established our Perspective that we have an enormous opportunity to intentionally create a better “future normal” rather than rushing back into the old normal. You considered what you have learned about being a leader that can improve your leadership in the future and also what you have learned about your team that can improve how your team operates in the future.
Second, we explored our Purpose and determined what matters. Knowing your purpose is key to focusing your attention on what truly matters, so we looked at what you want your legacy to be and what you and your team want your team’s legacy to be.
Now that you know what matters, you can determine whether your budget tells the same story.
How can you prepare your budget so you spend money on what matters?
The way we spend our money shows what’s truly important to us. It’s as true professionally as it is personally. If I say that supporting homeless shelters is really important to me but I never spend any money to help them, then is it really important to me? Similarly, if I say that developing my employees is really important to me but don’t provide budget funds for training, where are my priorities?
As you review your department budget, take note of what items receive the highest percentages of money and also what items receive the lowest percentages. How does this align with the legacy you are building? Does it reflect what’s truly important? Are there any contradictions?
Consider what you have learned about your team that can improve how your team operates in the future. There may be opportunities to rearrange your budget to help your team be more successful.
You may be stuck with your current budget, so think about the next one. Depending on your fiscal year, budget season might not be far away, so now is a good time to start thinking about how to budget in a way that better prioritizes what matters. Given the economic issues caused by the current pandemic, it’s very likely your budget may be even smaller than it was before, so it’s that much more important to arrange your finances intentionally.
The second aspect of this relates to your employees. During this pandemic, there have been so many furloughs, layoffs, pay cuts, and schedule reductions. As the days turned into weeks which turned into months, businesses are having to implement hiring freezes or other strategies to remain financially stable. It’s a very difficult time for a lot of companies. There was also very little time to prepare. There wasn’t the luxury of taking a couple of fiscal years to save up money. Companies have had to use whatever funds they already had to figure out their next steps.
How prepared were you to take care of your employees? I’m no health expert or financial planner, so I’ll stay out of those lanes. It simply seems to me that, given something like this has now happened, it’s possible it could happen again. Even if it’s hopefully not another worldwide pandemic, natural disasters can cause shutdowns too. Things can happen suddenly that change how your business operates.
It’s common advice that individuals should have 3-6 months’ worth of their earnings saved up in case of an emergency or job loss. Some advise a similar concept for businesses that they have 3-6 months’ worth of expenses available in cash reserves. What about for your business in particular? What do you need to make sure you’re better prepared for the next crisis?
As you prepare for the future, consider also how you’re taking care of your employees now. The pay and benefits you provide to your employees speak volumes about whether you truly value them. How competitive are your pay and benefits? Are you providing the types of benefits that are meaningful to your employees? Take a look at your lowest-paying jobs. Are you providing wages that help all of your employees to live comfortably and be able to save for their own futures and emergencies?
Here are two questions to spend some time thinking about in order to make sure your spending aligns with your purpose:
- In light of what matters, what changes need to be made in my budget to prioritize those things?
- How should I arrange my budget so I can take care of my employees now and be prepared for future emergencies?
Money can be a tough subject. There are a lot of feelings and opinions about money, and it can feel personal. Like it or not, though, how we spend money demonstrates what we value. If you make sure your spending aligns with your purpose, you’ll actually be funding your purpose into existence. It’ll no longer be just words or a hope or a dream. It’ll be a living, breathing reality.
With this foundation of knowing what matters and how to budget our finances accordingly, we’ll have the clarity to approach the next topic of how we spend our time.
Photo credit: By AndreyPopov / Canva
