How to Determine Your Budget

As the founder of MWB Inc., the question that I get asked a lot is,  “How much money did it take to launch MWB?” I used to find solace in stories where entrepreneurs launched their businesses with only $5,000 or $10,000  (, but the reality is that how much they spent, even on a similar endeavor, may not be the same as how much you will spend.

We all have projects, dreams, businesses or opportunities that we want to pursue.  The only way to know how much it will cost is to sit down and crunch the numbers. It is lovely to talk about the dream and visualize it, but at the end of the day, you need to do the work of the dream.

How to Determine Your Budget

  1. Take Stock of Your Current Financial Situation.

Instead of starting with the actual costs of your project, we first need to take a look at the big picture. If you are fortunate, after paying all your bills, you may have money left over for your project. That money can help determine what you can afford for your project.

The formula is:

Income – Income Taxes – Fixed Expenses – Variable Expenses – Debt Repayment – Savings

A. Add Your Income: Determine How Much You Make.

If you are employed (yay!), then you should know how much you bring in every month. If your income fluctuates, don’t take an average, but assume the worst-case scenario as a monthly amount. For instance,  if you make between $1,500 to $3,000 a month, you should put down an income of $1,500.

Why assume the worst-case scenario? Your income is more likely higher than your worst case scenario, but there is nothing worse than counting your chickens before they’ve hatched. The “extra” money that you make should be considered as a bonus. Welcome to the real world.

B. Deduct Income Tax.

If you are set to make the same amount as the last tax year, then looking at your last tax return should tell you how much to set aside from your income to pay tax this year.

If you are receiving money from the government, do not factor that into your budget, look at it as a lovely bonus.

C. Deduct Fixed Expenses

Fixed expenses are expenses that do not change over time, but are fixed and are independent of usage. For instance, your rent will always be a set amount each month, which makes it a fixed expense. Car payments and insurance are also fixed expenses. If you pay utilities, while it does fluctuate from month-to-month, a portion of your bill will always be the same even if you turn off all your electrical appliances.


D. Deduct Variable Expenses

Your variable expenses fluctuate over time due to your usage. For example, your food bill changes with your eating habits. Variable expenses include all the lovely things that you do for leisure and all the presents you buy for yourself and loved ones. In some cases, transportation may be a variable expense.

If you have no idea what you are actually spending your money on, then an app called Mint ( can help you quickly determine what you spend most of your money on. You may be surprised about how much that $10 latte before work actually costs in a year ($2,550, based on 255 working days).


E. Deduct Debt Repayment Amounts

If you have no debt, congratulations! You must make your mortgage payments each month, but you may want to talk to your bank manager if you want to make some changes or pay faster. In terms of credit card debt, pay the card with the highest interest rate more aggressively.


F. Deduct Savings

How much you put away each month is dependent on your personal situation. As a rule of thumb, determine how much you would need to survive for three months (food, rent, etc.) if you could not work and divide that number by 12. Your result will be how much you need to save each month.

2. Determine the Cost of Your Dream

A. Write Out What Your Dream Is

Ex. I want to turn my skills in graphic design into a business.

B. What Would Your Dream Look Like in 5 Years

Ex. I will have my own design studio and have multiple employees. We are a design hub and are sought out by big agencies for high-end design work.

C. What Do You Need For Your Dream?

Based on our example:

  1. An office
  2. A partner
  3. A website
  4. A better portfolio
  5. Contacts
  6. A dedicated phone line
  7. An assistant

D. Time to Edit. From Your List, What is Essential?

Based on our example:

  1. An office (not really essential, can do the work at home and meet clients at a coffee shop or even on Skype)
  2. A partner (nice to have, but not dire)
  3. A website (yes!)
  4. A better portfolio (yes!)
  5. Contacts (yes!)
  6. A dedicated phone line (I can use my cell phone)
  7. An assistant (too expensive, perhaps I can look at a virtual assistant)

E. Dig Deeper, Break Down Your Items and Find Costs for Each.

Based on our example:

  1. Home Office
    1. Supplies
    2. Rent payments
    3. Equipment
  2. A website
    1. Domain registration
    2. Hosting
    3. Site protection & security
    4. Website theme?
    5. Web developer?
  3. A better portfolio
    1. Materials and supplies
  4. Contacts
    1. How will I get contacts
      1. Social Media
      2. Advertising
      3. Radio/TV?
      4. Events?
      5. Associations
  5. Cell Phone
  6. Virtual assistant?

F. Edit and Dig Even Deeper.

This process can go on for a while, but you will be able to really focus on the costs that you need to incur and the ones that are not necessary for you to launch.


G. Be Creative.

Are there other, more cost effective ways for you to achieve your goals. Perhaps where you meet your clients will be unusual, but impactful. DO you know anyone that can give you need for free or at a discount? For example, maybe your friend has a great loft that can be used for events. If you are having trouble being creative, ask your friends for ideas (or join Collective Labs).


You will eventually reach the estimated cost for your project when you add up all your line items.


3. Putting it all together.

You have actually determined your “life” budget and your project budget; however, both budgets affect each other. The cost for you project may exceed the money left over from deducting all your living expenses. How will you make up the difference: credit? sponsorship? grants? a second job? reducing expenses?

In my situation, my biggest expense was not the actual cost of the project, but my living expenses. Your dream takes time to build and that time has a cost. Your costs will become more clear as you progress and don’t be surprised if it cost more than you thought. What matters is that you tried.

If you have any questions, please feel free to comment and I will reply.


Pamela Ogang,

Founder of MWB Inc.

I am the founder of Minority Women in Business (MWB) Inc. and every now and then I give the MWB audience a look at how I view the world and the lessons that I have learned so far. To learn more about me and MWB please go to the link:


Leave a reply

Your email address will not be published. Required fields are marked *


The CAPTCHA cannot be displayed. This may be a configuration or server problem. You may not be able to continue. Please visit our status page for more information or to contact us.


We're not around right now. But you can send us an email and we'll get back to you, asap.


©2018 Minority Women in Business Inc.

Log in with your credentials


Forgot your details?

Create Account