We all have different strengths and weaknesses. Mostly – but not always – Yoga Teachers come to the job from differing walks of life, and some will have a good grasp of finances, some less so.
A question that comes up sometimes is budgeting and forecasting, as part of managing your personal finances. For many its common sense, but for others a budget may be an alien idea.
Below are a couple of examples of how a Yoga Teacher may produce a simple budget.
The first is a “Bottom up Budget” – thats to say you start with outgoings and work up to income; the second is “Top Down Budget” – thats to say you start with income, deduct outgoings and see whats left.
Do you need monthly forecasts and budgets?
These examples are annualised budgets, and should not be confused with cash flow forecasts or periodic budgets. Do you need monthly forecasts and budgets? Well, a studio with large fixed outgoings and maybe bank borrowing, vat payments, quite possibly yes.
For a solo yoga teacher or small studio, that would probably be overkill and an annual budget is adequate – thats enough to help you understand what you need to earn to sustain your outgoings and lifestyle.
Bottom Up Budgeting
Here we start with expenses and work up. A typical approach might be:
- Work out regular personal monthly expenses – accommodation, food, travel, personal spending.
- Add to this savings and contingency goals
- Don’t forget pension provision, savings for tax and similar
- This subtotal is the cash you need to generate from your business annually
- Next add in business expenses
- Adjust this subtotal up for taxes
- The final sub total is your target business revenue annually – for example income from classes
- You can then break that down by classes per week to find a target revenue per class
Of course, the world doesn’t come in need packages so you need to allow for some months being quieter than others, but this is a guide to work to.
Also, its worth emphasising, that this approach helps you work out your minimum annual business revenue – if you achieve more then thats great; if you achieve less then time for reflection.
Top Down Budgeting
Here we start with income and work down. A typical approach might be:
- Estimating your annual business income – maybe classes per week x weeks in year x classes per week – or maybe you just know what you tend to bring in.
- Take off business expenses
- You are left with an estimate of business profits
- Deduct an estimate for taxes
- At this point you may want to add in other income – in our example we’ve added in income from a part time job
- Next take out fixed monthly living costs, and then fixed monthly savings, eg pension and tax
- Whats left is your free money for discretionary spending
Again, use the figures with caution – remember figures in a budget can change.
Template for your own budgeting
We’ve made a template for you which can be downloaded and modified – if you need help with this, please get in touch.
Budgeting Examples
Here is a Bottom Up Example – Follow this link to view in a new window
And here is a Top Down Example – Follow this link to view in a new window
