How to Budget as an Owner-Operator

February 11, 2020

Trucker's Corner

Improve your experience on the road with these tips to keep your truck healthy.

Are you considering becoming an owner-operator truck driver? One of the most important initial steps is to create a budget, so you know exactly where your expenses are going monthly and yearly. When you’re contracted to a company, the money you receive from truck driving isn’t 100% yours — or at least not in the sense that it’s yours to live off of. Certain dollar amounts should be set aside for repairs, taxes, household costs, and more. Building a budget is the easiest way to ensure all your bases are covered. Read on to learn more about how to budget as an owner-operator!

Create a Household Budget

One of the first steps to building a solid business budget is to first build a household budget. This will clearly lay out your monthly income, costs that stay the same every month, and costs that change from month to month. You can structure your budget in any way that’s easiest for you. You can use a software like Quickbooks or build a good old-fashioned budget spreadsheet with three columns — Revenue (with a separate section for Variable Costs underneath), Per Month, and Per Year with the total at the bottom.

List everything you spend money on, no matter how inconsequential the cost may seem. It’s important to get an accurate picture of where your money goes.

  • Income: List your income per month and per year. If you’re married, list your spouse’s income as well.
  • Fixed Costs: If you’re building a spreadsheet, list all fixed monthly expenses under Revenue and their dollar amounts under the Per Month column, then multiply each by 12. Place the results under the Per Year column.
  • Variable Costs: Variable costs are costs that change from month to month, such as the gas bill, groceries, and family car repairs. Refer to your bank account statements, receipts, and other records to find an average for each month, then multiply the costs by 12 to find the yearly average.

Create a Business Budget

Once you’ve created a household budget, it’s time to start thinking about how to budget as owner-operator of a trucking business. Unexpected costs tend to arise during the first few months of launching a business. When you build a business budget, you’ll have a better understanding of how many miles you’ll have to drive to cover your monthly and yearly expenses.

If you have experience truck driving, you already have an advantage in the sense that you know how many miles you drive, how many hours you can work, and how much you can earn in the process. Even if you do have extensive experience, it’s always advisable to connect with other owner-operators, who can answer any questions you may have about costs associated with truck maintenance, permits, registration, and more.

Again, you can lay out your budget however you’d like, but a good starting point is to create four columns: Revenue (underneath, list Actual Miles, Revenue Miles, Personal/Joint Income), Per Month, Per Year, and Cents/Mile. You’ll want to add separate, easy-to-read sections for Fixed Costs and Variable Costs, as well as their totals. Both sections should outline the different types of fixed and variable costs on a monthly/yearly basis and their costs per mile. When creating your business budget, consider the following:

  • Miles: For Actual Miles, list how many you expect to travel on a monthly/yearly basis. For Revenue Miles, list the number of miles for which you’ll get paid for traveling.
  • Fixed Costs: List your business’ fixed costs, such as your truck payment, license and permits costs, insurance premiums, tax services, etc.
  • Variable Costs: Costs like fuel, oil, truck maintenance, tire replacement, legal services, etc. are considered variable.

When creating your business budget, consider the slow months during which you won’t be doing as much truck driving due to poor weather conditions or another external factor. It’s important to make sure you have enough funds to get you through those slow points, so you won’t end up in the red. Also make sure to take advantage of programs for truck drivers, including the My Love Rewards program which can help save on drinks and let you earn points on gas purchases.

Learn More About How to Become an Owner-Operator

Do you have additional questions about how to budget as owner-operator, or need suggestions? The team at International Used Truck Centers can provide more information on common costs for truck drivers, such as insurance payments. Shopping for a used truck for sale? Contact us to schedule a test drive at one of our locations nearest to you!

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