What are Your Budget Goals?

The purpose of a budget is to guide an individual to achieve specific financial goals. Consider the budget as the action plan for meeting those objectives. Before actually creating the budget, the first step is to establish a set of goals that will be accomplished with the financial plan. Without setting goals, the budget might seem more like a restriction than a means to an end. Consider those targets as the reward for the effort of making and sticking to a budget. In the planning stage, take the time to consider both short- and long-term goals. What do you want to achieve in the next six to twelve months? In two years? In ten years? - Maybe saving money to pay for a wedding in the next six months is a short-term goal, but in the next three years, you hope to buy a new home and will need to have saved the down payment. Be specific about your goals in order to ensure that the budget is created to most efficiently and effectively accomplish them. If the budget is for a household of more than one person, share the goals with everyone involved, whether family members, roommate, or partner. It’s important that every person understands the objectives and shares the responsibility. For example, if you’re saving for home repairs or a vacation, the outcome benefits the entire family. Therefore, they need to be as committed to the budget as you are. Give everyone the task of finding money-saving alternatives and create a chart to show progress so the younger family members can feel involved. If household bills are shared between you and a roommate or partner, discuss your objectives with that person. You don’t need to divulge the details of your budget, but talk about certain expenses, like groceries and utility bills, to explore how you can find a way to live within your budgeted amount. Be reasonable, honest, and willing to consider options. Short Term Goals Short term goals are goals which are generally expected to be acheived in less than a year. These could be for example set on a weekly or monthly basis. Here are some examples of short-term goals:
  • Reduce debt
  • Pay for home repairs, renovations, or a new appliance
  • Pay off medical bills
  • Save for the down payment on a home
  • Build a savings account
  • Create a retirement account
  • Set aside money for a vacation
  • Buy Christmas gifts
When setting short-term goals, it is adviable to create a time based schedule a long with a modest action plan. This allows you to measure progress against a timeline. A goal without such a deadline is open-ended and leaves too much room for failure. Next, consider the long-term goals for your budget, such as:
  • Save for a college education
  • Quit your job and start your own business
  • Build a retirement fund
  • Pay off the mortgage early
  • Purchase a new or vacation home
  • Create enough savings to retire early
Once you’ve identified your goals, you have the target for a budget.

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