Setting your first long-term budget goals
Article provided by iGrad
Budgeting is no fun if it’s just about how to afford basic bills. But if budgeting can also help with saving for vacations, a new car or adding a Jacuzzi in your home, it becomes a lot more interesting. Here’s how you can get started saving for your first long-term goal:
1.) Start by thinking about a realistic time from for completion. You may not be able to save for a trip to Tahiti in 3 months, but you might be able to save for a weekend trip. Take a hard look at your finances to see what money you really have available. You can always squeeze a little more money into your goal by cutting other bills, but setting a time line based on what you can afford now will ease the stress from feeling like you are behind on savings.
2.) Decide on which goal you’d like to start with. Once you’ve looked at realistic timelines for the goals you’d like to complete, you can set your goal and goal timeline. Don’t be afraid to save for larger items in time chucks and reward yourself. For instance, maybe your goal is to save for a home down payment and you know it will take 4 years. Divide the total you need by four. Then you can see an annual goal is achieved and you can go out to diner to celebrate or buy a new outfit that’s within your budget. Giving yourself small rewards along the way will also help you feel like your progressing towards goal completion without sacrificing other aspects of your life. After all, it’s hard to live on beans and rice and never go out for dinner for 4 years.
3.) Streamline your budget as you go. The nice thing about setting a goal for one part of your financial life is it will generally help you improve other parts. This doesn’t mean giving up your lifestyle. It just means thinking about what you’re really spending and whether it’s worth it. For instance, let’s say I have a goal to lose 10 pounds. I’m not going to buy new clothes until I do. If you’re saving to buy a new home you wouldn’t buy any new furniture, unless it’s to replace an item that’s falling apart, until you move. Not only would you avoid spending in these categories, but you might also compare auto or home insurance rates, negotiate your phone bill, or start skipping appetizers at restaurants. When you’re budget aware, you may decide to put a percentage of these savings into speeding up goal achievement or just improving other areas of your life.
4.) Achieve your goal. You’ll get there with a little hard work. Don’t let financial setbacks lead to goal cancellation. You can always put a goal on hold. Fix the situation and then start saving again. Then finally, set your next goal.