If you are in the early stages of starting your business, you may be looking to apply for a start-up loan. The application will ask you for a few different bits of information and one of those is your personal survival budget.

This is to show how much income you have left after paying your bills and expenses, which would be set aside for more personal expenses e.g. personal survival.

Submitting your personal survival budget helps the bank determine whether you will be able to make the startup loan repayments, similar to the approval process of personal loans.


Creating your personal budget

If you have an accountant, they may be able to help you put your personal survival budget together from your monthly accounts.

Another option, if you manage your accounts yourself, is to compile your monthly incomings and outgoings. From this, you’ll be able to calculate what money you have left over and be able to start to manage that budget. The idea is that you have enough in order to live and, ideally, put a set amount into savings each month

You then need to look at this plan and decide what effect getting a start-up loan will have on your monthly income and personal spends/savings. You also need to include the monthly repayments into this mix and figure out if this loan will benefit or hinder your business growth.

It is good practice to keep track of all your monthly budgets for a good few months, as many self-employed people will have fluctuating incomes. This helps you to better identify patterns in your spending and gives you time to rectify any areas that might be costing more than they should.

Personal Finance Tracker


How to use your personal survival budget

Once you have a clear idea of how much you spend every month and how much you have coming in, now it’s time to start putting your survival budget to work.

This is where you take the monthly budget and start to make cuts to only include the essentials needed to survive. This includes clothes, food and cutting down on luxuries like Netflix or an extra package on your cable TV.

This stripped back budget is your personal survival budget, this is all the money you need to spend in order to pay bills and survive. It’s important to have this for when work is slow or if freelance jobs dry up. There will always be months when incomings are not as plentiful and having a survival budget ensures you have a plan in place.

Having a personal survival budget can be the perfect fail safe for your business, it ensures that you are always keeping in mind how much of your money should be going towards your business and how much you need to live.

Without this, you may find yourself over spending on your business, or not spending as much as you could. It helps you to find balance in your finances and ensures that you are investing the right amount when launching your business.  

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