Launching a business can be extremely rewarding, but it’s often a lean time, financially speaking. And while every entrepreneur hopes for success down the line, the reality is that you usually have to tighten your belt in a business’s early days and be mindful of how you’re spending every pound.
That’s why taking the time to build a personal survival budget can be helpful. As part of your financial planning for your startup, early forecasting and budgeting mean you can rest assured that your personal necessities are taken care of, allowing you to focus on making your business a success.
In this guide, we’ll discuss the personal survival budget, what it should include, and how you can use it to keep your business on track as it grows.
Key takeaways
1. Understand the purpose of a personal survival budget
A personal survival budget is a simplified monthly spending plan that details the minimum income required to cover essential living expenses. It helps you understand exactly what’s needed to stay afloat financially while your business is getting started.
Think of it as a bare-bones monthly financial plan, consisting of the essentials and nothing more. How much do you need to keep your household ticking over after factoring in rent, food, bills, and other key expenses?
To create a personal survival budget, you’ll need to determine how much money you need to meet key financial commitments while your business finds its feet. This budget can give you an economic reality check when your income is about to change, especially during unpredictable times. Having a personal survival budget in your back pocket is also useful when managing your startup’s finances and applying for funding or loans.
- Why businesses fail: How to use a pre-mortem analysis for your startup
- 7 business mistakes to avoid when starting up
- How to write a business plan
Unlike your typical household budget, a personal survival budget doesn’t include nights out, holidays, takeaway nights, or other treats. That’s not to say those expenses don’t matter, but this budget is focused on managing essential personal finances while you get your business off the ground.
2. List your essentials (and just your essentials)
Once you’ve understood the concept of a personal survival budget, the next step is to work out what you need to cover financially, month after month.
This is where you have to be honest with yourself. Start by writing down all your non-negotiable monthly costs for the likes of:
- Childcare or dependent care
- Council Tax
- Food and other groceries
- Loan or credit card repayments
- Phone bill
- Prescription or medical costs
- Rent or mortgage repayments
- Transport (petrol, insurance, or fares)
- TV licence (if applicable)
- Utility bills (gas, electricity, water, Wi-Fi)
It’s wise to include a small emergency buffer for things like unexpected dental bills or urgent repairs to your car – but keep it realistic and in proportion to your actual income.
If you’ve got one-off annual costs, remember that bills like insurance premiums and school uniforms must be factored in. A smart approach is to annualise that cost: divide the yearly total by 12 and add the resulting amount to your monthly figure.
Add up all of those figures, and you’ll have your total monthly survival expenses. This gives you the key baseline you need to keep your life on track while your business scales.
3. Add up your reliable income
Now that you’ve calculated your essential expenses, it’s time to look at the other side of the equation: your money coming in.
Remember, this budget is part of your financial planning for your startup, so aim to be precise and realistic – even err on the side of caution. Consider including:
- Your salary (if you’re still working part-time)
- Any government benefits or tax credits
- Your partner’s contributions (if applicable)
- Any personal savings you plan to draw on
- Other income streams, like share dividends or rental income from property
- Child maintenance or other regular support
If you’re just starting out, it’s usually safest to assume your personal income from the business is £0. You can always revise this later as your revenue grows.
4. Work out the difference
Once you’ve added up your monthly expenses and understood how much income you can rely on, it’s time to bring the two sides of the equation together. Simply subtract your total monthly expenses from your total reliable income.
If the number you get is positive, good news: you’ve got a survival surplus. Even a small cushion, like £20 or £50, can give you breathing room.
If, on the other hand, the result is negative, don’t panic – it’s not necessarily a fatal flaw. Take the figure as an invitation to reassess, adjust, and plan again.
Let’s look at an example of a personal survival budget:
Monthly income
| Source | Amount |
|---|---|
| Part-time job | £700 |
| Universal Credit | £280 |
| Partner’s contribution | £200 |
| Total | £1,180 |
Monthly expenses
| Category | Amount |
|---|---|
| Rent | £650 |
| Food | £200 |
| Utilities | £100 |
| Transport | £60 |
| Phone + Internet | £45 |
| Loan repayment | £120 |
| Total | £1,175 |
Balance
£1,180 – £1,175 = £5 surplus
The remaining £5 isn’t exactly a princely sum, but it still means you’re not in the red. If you are running at a deficit, start by closely examining your expenses. Are there any outgoings you could pause, cut back on, delay, or space out?
After that, scrutinise the income side of your personal survival budget. Ask yourself whether you’re maximising what’s available to you. Could you pick up any extra part-time or freelance work while your business grows? Are there any support schemes, tax reliefs, or small business grants that you could apply for?
5. Check in with your budget regularly
As time goes on, your circumstances will change, so it’s important that your budget changes too.
Maybe your rent goes up. Maybe your business starts becoming profitable. Perhaps an unexpected cost pops up, and you take on some freelance work. Whatever happens, your budget must reflect where you are now, not where you were three months ago.
That’s why you should review your budget regularly – ideally once a month or at least every quarter. Start by comparing it with your bank statements to ensure you’re managing your money regularly and accurately. It’s incredible how many small costs go under the radar until you go through your expenses with a fine-tooth comb.
If you’re having trouble balancing your budget, check what government support you may be eligible for. Help is available for utility bills, housing, and health costs.
6. Link it to your business plan
Now that you’ve figured out your personal survival budget, you’ve taken a crucial step – one that should fundamentally reshape how you approach your business.
Why? Because this equation allows you to work backwards, setting confident, realistic goals instead of wishful ones. You can use your survival budget to set personal income targets, decide how much you can realistically pay yourself (and when), and factor careful contingency planning into your personal financial predictions.
Here’s what that might look like in practice. Let’s say your personal survival budget is £1,200 per month. If you’re expecting your business to break even in twelve months, you know you need to find a way to bridge a £14,400 gap in the meantime.
Whether you raise that sum through savings, part-time work, or taking out a loan, you now know how much income you need to get through your first year of business.
Time to keep your budget close
While often overlooked, creating a personal survival budget can be one of the most empowering steps in launching your business. It gives you clarity and control. And most importantly, it gives you the peace of mind to focus on bringing your idea to life.
Take the time to work through these six steps to give yourself a clear view of what you need to do to keep your personal finances afloat as your business grows. Now it’s time to keep your personal survival budget close, check in with it regularly, and allow it to evolve as your life and business develop.
If you are ready to launch your own business, there is no better place to start than the Quality Company Formations homepage, where you can take the first step in forming a limited company.
If you have any questions about this blog or starting a limited company, leave a comment below and we will get back to you.
Join The Discussion