One of the biggest questions that I get asked is how much to set aside for admin expenses before they get out of hand. I have to say the best way I’ve found to handle this is to cut them out completely and just budget for them as you would with any other expenses.
Most of the time the amount you budget for admin expenses is based on the actual amount you receive for them. In other words, if your accountant tells you that you owe $50k for taxes, you can say that you have a budget of $1 million for admin expenses. But if he tells you that you owe $500k for taxes, you can say that you have a budget of $1 billion for admin expenses.
This is the same approach as when we budget for our own utilities. We budget for things that affect our daily lives as opposed to things that need to be fixed on a day-to-day basis. This allows us to budget for much more in the long run. It also makes it easier to budget for other expenses you don’t know what they are yet.
We always try to budget for the things that affect our daily lives: our electricity, water, heating, and so on. But our budgeting often has to be flexible to cover other expenses that we dont know what they are yet. For example, if we have a hard time paying our water bill, we may decide that we have a budget of only 2 million dollars for all these expenses.
Yes, we can do that. We can budget for electricity, water, and heating. We can figure out what other expenses we dont know what they are yet. But I would still suggest you take all the time you need to budget for all the expenses you know you must have and figure out what you are going to do about them. If all your budgeting is for the things you can change easily, then you probably cant budget for all the things that you have to plan for.
We don’t have money to spend on other expenses, and so we can’t change our budget in any way we want. But we can change our personal spending habits. We know that if we spend $30 a month on our internet service we will never be able to afford a new computer, so we can get rid of our internet service plan for a month and then switch it to something else.
If you know that it is justifiable to change your spending habits to save money, then you can change it without spending a dime. However, it may be worth your while to make sure you don’t spend $100-$200 to keep your internet service company that you currently use.
As it turns out, I am one of the very few people who can even give you a straight answer on a budget variance. I was told that you can change your spending habits to save money, but it costs you a lot. The most I could give you was 10-20%. But what happens if you change your spending habits and still end up paying the same amount? We’ll just have to wait.
I would say that you can spend as much as you want, but don’t expect your bill to be that much less. The reason for this is that our internet service provider, Sprint, will charge more for internet than our other phone service providers charge. When you have internet, you have a lot of possibilities. But the fact is that most people can’t actually use all of them. That’s why they charge you more.
I think that’s a good point, so if your regular internet usage is less than a certain level, then the extra costs will be small. I think Sprint charges $20 per 1GB of bandwidth, so that’s $20/GB. On the other hand, when you do get to use all of the internet, then it would be worth paying more.