Make a personal budget: how much money do you actually need?

What is a personal budget?

In a personal budget, you list all your expected personal income and spending for a set time. This gives you a view of how much money you need to meet your costs, and how much you must set aside for one-off costs.

A personal budget is part of your financial plan. You can also use the results to determine how much income you need from your business.

How to draw up a personal budget

Start with your fixed and variable personal costs. Fixed costs include housing costs, insurance, subscriptions, groceries, clothing, transport, and leisure. Also, take into account costs that you do not have every month, such as holidays, maintenance, or the replacement of household appliances.

Add these costs for a year, and divide the sum by 12. This shows the average amount you must set aside each month.

Also, think about saving and building a money reserve. Include an amount for this in your personal budget if you want to make room for it.

Next, list your personal income. This includes any income from a partner, wages from other work, benefits, or other sources of income. Benefits may also form part of your income. Keep in mind that benefits may change if your income changes.

How much money do you need from your business?

Subtract your other personal income from your total personal spending. The amount left is the amount you need from your business.

How money moves from your business to your personal account depends on your legal structure.

• Eenmanszaak, VOF, or maatschap: the money you take from your business for personal use is a personal withdrawal. A personal withdrawal is not a business cost and does not lower your profit.
• CV: the tax treatment depends on your role. A managing partner who is regarded as an entrepreneur for income tax purposes is treated differently for their share of the profit than a silent partner.
• BV: this pays corporate income tax on its profit. If you work as a managing director and major shareholder for the BV, you will receive a salary for this. The BV deducts payroll taxes from your salary and pays them to the Tax Administration. You must take the ‘normal salary’ into account in this regard. Your net salary is the amount you include as income in your personal budget. If you receive a dividend, you pay tax on it in accordance with the rules on large holdings.

What do you pay tax on?

When drawing up your personal budget, take into account the taxes you have to pay as a private individual. If you run an eenmanszaak, VOF, or maatschap, you, as the business owner, pay income tax on your business profits. The amount you transfer from your business to your private account therefore does not determine how much income tax you pay. You pay tax on the profits, even if you leave part of those profits in your business.

In the case of a BV, the company pays corporate income tax on its profits. As a business owner, you pay income tax on your salary. If you receive dividends, you pay tax on them in accordance with the rules on substantial interests.

Example of personal budget per month

 

Check your personal budget often

Do not just use your personal budget when you first set up your business. Review your budget often. Have your housing costs, family circumstances, or other expenses changed? If so, the amount you need from your business will also change.

Personal money plan

Running a business involves money risks. With the Geldplan ZZP (in Dutch) from the National Institute for Budget Information (Nibud), you can limit these risks. Answer a few questions about your situation anonymously, and find out from your personal money plan how you are doing financially. And also what you can do to gain more control over your money.

Personal budget as part of your financial plan

The personal budget is an extra part of your financial plan. The personal budget helps you to adjust the business budgets to your personal situation. This way, you will know how much income you need from your business. The business budgets in your financial plan are: investment budget, operating budget, cash flow budget, and financing budget.