Have you given thought to your financial goals lately? Maybe your short-term goals include going on a cruise or buying a new car. In the long term, maybe you’d like to purchase a second home in the mountains and build a solid retirement fund. No matter what financial goals you have your sights set on, a little planning and commitment can go a long way toward achieving them.
One way to start your journey is to prioritize your financial goals in order of their importance. Once you’ve figured out which goals you want to accomplish and have mapped out a timeline for each of them, it’s time to create a budget. Charting out how much money you have coming in and going out will allow you to determine how much money you can realistically save on a regular basis toward your goals.
When putting together your budget, you should start with the amount of money you have coming in each month. From there, you’ll need to map out all of your monthly expenses. These costs include your housing, food, cable, and phone bills, as well as your transportation costs, and should also include any “extras” you’d like to budget for such as gym memberships, or a few restaurant dinners and shopping trips.
By deducting your recurring monthly expenses from your monthly income, you can get a sense of how much money you should have left over every month. This is the money you can save toward your short-term and long-term financial goals. If you find that the amount of “leftover” money you have each month isn’t sufficient for your savings goals, you may have to make some adjustments to your budget in order to stretch your dollars further. For instance, it might make sense to trim your cable TV package (do you really need hundreds of channels or a DVR in every room?) or you could cut back on the amount of times you’re eating out every month.
Once you have a good sense of the amount of money you’ll be able to save every month, you can go a bit further with your planning. For instance, if your goal is to buy a new car, and you have a set amount of money you’ll be saving each month, you can easily determine what kinds of vehicles you can afford. Likewise, if you’re saving up for a dream vacation, knowing how much money you’re setting aside for your trip each month will help you choose a destination that isn’t outside of your budget.
And you should always consider a budget to be a work in progress, especially when looking at your long-term goals. If you’re just starting out in your career, your income is likely to climb over the course of five to 10 years. As long as you keep your expenses in check, you’ll have more discretionary income to set aside for that new house as time goes on.
By staying committed and keeping a close eye on your budget, you’ll have a better chance of reaching your short-term and long-term financial goals and paving the way for a bright fiscal future.