Managing a business involves many moving parts, but one of the most important aspects is budgeting.
As a therapist or private practice owner, it’s crucial to have a good grip on your financials to ensure that your business runs smoothly.
That’s why it’s essential to create a comprehensive budget, no matter if you’re new to the game or have been in business for a while.
Now that we’ve entered the new year, it’s an excellent time to reassess your budget and make any necessary changes.
By having a budget in place, you’ll be able to make informed decisions, keep track of your spending, and ultimately, work towards achieving your financial goals.
In this blog, we’re going to walk you through step-by-step how-to create a budget for therapists in 2023.
Let’s jump in.
6 Steps to Create a Budget for Therapists in 2023
Making a budget for your therapy practice is not dissimilar to a budget that you make for your personal life.
At its core, it’s expected income – expected expenses = money you keep.
Here are the steps we recommend taking to create your 2023 budget for your therapy practice:
1. Get out your last few months of bank statements
As a first step, we recommend grabbing a coffee (or glass of wine) and sitting down to review your last few months of bank statements. Go through your expenses line-by line and see if there are any that you can take out.
In fact, a good exercise that you can try is to take out ALL expenses from your business, and add them back in one by one, in order of priority, until you hit the expenses that you can really do without.
While this technically is not an essential step of creating a budget, budgeting time is a great opportunity to review your business expenses and try to get them down as much as possible.
What’s a few more minutes of spreadsheets if it can save you thousands of dollars each year?
2. Determine your monthly income
Ok, now onto the actual budgeting. The next step of budgeting is to know how much money you are bringing in each month.
As a therapist, your income may be variable, so it’s important to track your income closely.
We’ve written a few really helpful blog posts in this area – how-to calculate your Average Session Fee (ASF) and how to reach your target salary. We recommend checking out these blogs first!
3. Calculate your monthly expenses
Now, back to your expenses. Make a list of all your monthly expenses, including rent, utilities, insurance, and any other bills you have to pay regularly.
Be sure to also factor in expenses related to your therapy practice, such as office rent, supplies, and marketing costs.
And take out any of the unnecessary expenses you found in step #1.
4. Set financial goals
Budgeting isn’t just about paying bills, it’s also about working towards financial goals. Set short-term and long-term financial goals, such as saving for retirement, paying off debt, or investing in your therapy practice.
We deal a lot with this with our clients here at TL;DR: Accounting. If you need help creating long-term financial goals, and a roadmap to get there, you can book a call with one of our accountants here anytime.
5. Create a budget
With all of this information in mind, now you can create a budget that works for you.
Allocate your income towards your expenses and financial goals, and make adjustments as needed.
6. Track your spending
To make sure you’re sticking to your budget, it’s important to track your spending.
