How to budget for your small business using Expensify

For small businesses, managing finances effectively is crucial for sustainable growth. As the Chief Strategy Officer at Expensify, I'm excited to introduce you to our new budgeting feature that empowers small business owners and managers to take control of their expenses.

Why budgeting matters

Budgeting is the cornerstone of financial success for any small business. It provides a clear roadmap for financial decisions, helps control spending, and ensures that resources are allocated wisely. With a well-defined budget, you can monitor expenses, identify areas for cost optimization, and ultimately increase profitability.

But how do you make budgeting a seamless and efficient process?

Introducing Expensify's Budgeting feature

Expensify's latest budgeting feature is a game-changer for small businesses. It enables you to add budgets to your expense categories and customize alerts. Here's how it works:

1. Budget customization: Tailor your budgets to match your business needs. Set specific budgets for different expense categories such as office supplies, travel, or marketing. Additionally, set them for clients, projects, etc for more granular budgeting.

2. Realtime alerts: Stay in control with realtime alerts. Expensify will notify you when you approach a certain percentage of your budget, ensuring that you're always aware of your financial status.

3. Over-budget notifications: Set custom notification levels or use the default such that if you exceed 100% of your budget, Expensify will promptly notify you, helping you avoid overspending.

The power of virtual cards and cash back rewards

Expensify goes beyond traditional expense management. We understand that controlling expenses involves more than just setting budgets.

That's why we offer virtual cards and cash back rewards to help you manage your spending effectively and make sure you come out on top of your budget:

1. Virtual cards: Our virtual card feature allows administrators to create virtual cards for specific vendors. This empowers employees to make purchases while staying within their budgets, ensuring better expense control.

2. Cash back rewards: Every penny counts in small business finance. Expensify offers cash back rewards, putting money back into your pockets with every qualified purchase on the Expensify Visa® Commercial Card (applies to USD transactions only). It's a win-win for your business.

Growing your business with Expensify

Small businesses are dynamic, and their needs change as they grow. Expensify is designed to evolve with your business in the following ways:

1. Advanced approvals: As your business expands, you may need more sophisticated approval processes. Expensify offers advanced approval workflows to meet these evolving requirements.

2. Budget reporting: For a deeper understanding of your financial performance, Expensify provides comprehensive budget reporting, enabling you to make data-driven decisions.

3. Expanded category rules: Customize expense categories and rules to match your evolving business structure, ensuring accurate tracking and analysis. Require attendees, descriptions, projects, and more. 

Budgeting from zero: A simple, practical framework

Budgeting is easier when you have a system doing the heavy lifting and Expensify makes that possible by tracking expenses automatically, setting category-level budgets, and sending alerts before you overspend.

But what if you’re not ready to set up your budget in Expensify yet? Maybe you’re just trying to get a handle on where your money is going, or you're building a budget for the very first time with excel.

Start here.

These five steps will help you build a realistic budget from scratch, whether you’re using Expensify or a blank piece of paper. And when you are ready to level up, Expensify can take over the reporting, tracking, and guardrails, so you don't have to do budgeting manually forever.

Step-by-step: budgeting from zero

1. Calculate your average monthly revenue

Before you can create a budget, you need to know what you’re working with.

Look at:

• Your last 3–6 months of income (or projected income if you’re new)

• Any seasonal fluctuation (consulting, teaching, project-based work)

Use your lowest month as the baseline, not your highest.

→ Why? It prevents over-allocating during slower periods and helps you build a resilient budget.

2. List all fixed expenses

These are the costs that don’t change month-to-month:

• Software subscriptions

• Rent or utilities

• Salary/payroll

• Insurance premiums

Add these as your first budget layer because they consume revenue before anything else.

If you're already in Expensify, set fixed costs up as budget categories so your spend automatically maps to them.

3. Identify variable costs and hidden spending

These are the expenses that fluctuate:

• Ads or marketing spend

• Contractor hours

• Travel, meals, client entertainment

Variable costs are where budgets go sideways.

Note: In Expensify, you can tag these with variable budget categories and turn on alerts so you get notified at 50%, 75%, or 90% of budget spend, before you exceed it.

4. Build a contingency (buffer) fund

Even perfectly planned months throw surprises at you. Common unexpected expenses:

• Ad-hoc travel

• Urgent equipment replacement

• Consultant support

Aim to put aside 5–10% of your monthly revenue as a buffer. Label this category “Contingency” (or the “Oh no fund.” We won’t judge!).

Note: In Expensify, once spend hits this category, Insights will highlight the spike so you can adjust other spend areas.

5. Review monthly. Adjust quarterly.

Budgets are living systems and not a one-time task.

Your monthly review covers:

• Spend vs. budget by category

• Category trending over budget

• Whether you dipped into your contingency fund (and why)

Your quarterly review covers:

• Revenue changes

• Cost inflation (SaaS renewals, payroll changes)

• Growth plans that require new investment

Inside Expensify:

• Insights dashboard shows spend vs. budget automatically.

• Custom reports let you export budget performance over time.

TL;DR

You don’t need a complicated system to start budgeting; just know how much money comes in each month, list your fixed expenses, identify where spending fluctuates, set aside a small contingency fund, and review regularly. If you’re doing this manually, spreadsheets work.

But when you’re ready to save time, Expensify automates the tracking, categorization, and alerts so you don’t have to chase receipts or update formulas.

Ready to stop babysitting spreadsheets?
You can set up your first budget in Expensify in under 10 minutes, and let the platform track spending, warn you before you overspend, and generate reports automatically.

FAQs about creating budgets with Expensify

• What’s the difference between fixed and variable expenses?

  Fixed expenses stay the same each month (e.g., rent, payroll), while variable expenses fluctuate (e.g., travel, marketing). Expensify automatically categorizes expenses into fixed/variable categories so you don't track them manually.

• How often should I review my budget?

  Do a quick check every month, and a deeper review every quarter. Monthly reviews help you catch overspending early; quarterly reviews help you adjust forecasts and reallocate spend.

• Can I use Expensify to create a budget?

  Yes. With Expensify Budgets, you can:

  Assign budgets by category (marketing, travel, software, etc.), set alerts when spending approaches budget limits, track spend in realtime via Insights and custom reporting, and more.

• How does Expensify help prevent overspending?

  Expensify automatically alerts you when spend in a budget category reaches a threshold (e.g., 75% or 90% of the budget), so you can adjust spend before you overshoot.

• Can I track budgeting and expenses for multiple teams or departments?

  Yes. Set budgets by department, project, location, or even client. Expensify will track spend across teams and roll it up into one reporting dashboard.

• I’m not ready for budgeting software yet. Can Expensify help anyway?

  Absolutely. You can start by using Expensify simply to track spending, categorize transactions, and store receipts. When you're ready to build a budget, all your spend data is already organized, making setup effortless.