In this blog post we will be discussing creating budgeting goals and why you need them. It’s not enough to simply create a budget, you should also have budgeting goals in mind. These simple goals will allow you to save money and stop overspending on unneeded expenses.
The Beginners Guide to Creating Budgeting Goals
When you first started budgeting your finances, you may have only focused on one main goal such as saving up for a new car. But, what happens once you’ve achieved that goal? Otherwise, you will lose motivation to continue sticking to the budget you’ve set. Looking at your budget annually can help you see spending patterns you may not see in a monthly budget.
What are Creating Budgeting Goals?
Just like when you first started budgeting you had one main goal in mind, buying a new car. Now that you’ve accomplished that first goal; you can adjust you budget to focus on other goals like saving for a dream vacation. Start with a manageable goal like saving $150 per month, that will give you $1,800 after 12 months of saving.
Remember, keep your goals manageable like only saving $75 per biweekly paycheck. that way the goals don’t seem unreachable. If a goal seems unreachable chances are you will be less likely to stick to your budget and reach them. The smaller the goal is the more likely you will be to reach that go and stay motivated to stay on budget.
How to get started with Creating Budgeting Goals
In order to get started with creating budget goals a person should have at least a 12 month overview of your budget. Tracking your budget for 1 year will allow you to see what types of goals you should set for the following year. For example, let’s say your goal from the previous year was to save money to buy a new home.
The following year’s budget goal could be to save money to remodel the new house’s back porch and turn it into a deck. Or another goal could be installing an above ground pool in the backyard. Create budget categories that you can use to funnel money from previous goals into new goals. This allows you to take money used to from the previous year’s goal and put it towards the new goal.
One example of this is I will take the money that I budgeted to buy a new home, and funnel that money into remodeling the back porch, or putting in an above ground pool. You are basically rerouting money from one area of your budget to another area of your budget.
Tips for Success When Creating Financial Goals
In order to be successful with creating budgeting goals you need to think about both long-term goals, and short-term goals. For example one short-term goal would be installing an above ground pool. For example one long-term goal would be saving for retirement.
Focusing on both the short-term goals and long-term goals is the best way to plan for your financial future. You want to see both the short-term picture of your budget as well as the long-term picture of your budget. Having an overall picture of your total budget will help you better plan out your goals for the next year.
Common Questions/FAQ About Financial Goals
What are some short-term financial goals I should prioritize?
Focus on any goals that can be completed within a 1 year time frame. Such as remodeling a back porch into a deck or adding an addition onto a home. Write out a list of at least 3 to 5 short-term goals you have then, prioritize them from the highest priority to the lowest priority.
What are some long-term financial goals I should prioritize?
Focus on any goal that can be completed in over a 10 to 20 year time frame. Such as saving for a child’s college education, or saving for your retirement. Write out a list of 3 to 5 long-term goals that you have then prioritize them from the highest priority to lowest priority.
How can I budget for new expenses such as a growing family?
You may have started a budget when you graduated from college, but now you have a family to care for instead of just yourself. Your financial obligations have changed so revisit your old budget and start including all the new obligations you have. Chances are I will find a few categories that can be moved from on area of the budget to another.
How often should I update my budget?
I recommend updating your budget at least 2 times per year, that way you will be able to track your income and expenses. I regularly look over my household’s budget in the spring and fall usually around March and then again in September. Looking over my budget twice per year allows me to plan for things on a 6 month interval.
What if I have expenses that don’t fit into my budget?
Generally when creating a budget its best to break up the budget into categories. Remember to list each expense into a category such as a mortgage. I break my budget into 3 different categories that include; our needs, our wants, and finally a miscellaneous category. That way all of our expenses fall into one category or another.
The Last Thing You Need to Know about Financial Goals
Remember creating budgeting goals can help you understand where your money is going and it also allows you to save money in areas of your life that matter the most to you. Everyone’s financial goals are different so don’t think that your goals will be the same as mine or anyone else’s.
If your looking for more budgeting inspiration then why not head over to my Pinterest profile to see more great content. If your looking for more information on how to start a budget then check out my blog post on creating a budget the beginner’s guide. You can also leave me a comment on what budgeting tips or tricks you’ve used.