Just like dieting, I hear groans at the thought. I know some just want to take their credit cards and go shopping at the mention of the words.
To quote a famous marketing phrase, the best advice for budgeting and goal setting is “just do it!”
It really is as simple and as difficult as this. If you are looking for guidance here are my tips:
First separate your assets from your liabilities. (Assets “make money”, Liabilities “cost money”.)
Place these in two columns. You will start to see a “cash flow” and “net worth” which is the difference between your assets and liabilities.
The great thing about budgeting and goal setting is that it is in a constant state of movement and change. By gathering your financial information you are already becoming more educated, informed and in control of your own financial fitness and future.
I see budgeting and goal setting as preparing the soil. It is an essential element for Financial fitness and growth. It requires constant “Review” and “Revision” to reap the “Rewards.”
Budgeting and goal setting takes patience, persistence and faith. Just like planting a seed we cannot expect it to blossom instantly.
While planning for the future, it is also important to review our will, income protection and life insurance cover which can be done at the same time.
Gather together payslips, bills, statements and receipts and start placing them into your budget.
There are many ways of recording this information, it is as individual as we are, whatever feels comfortable and works is fine. There is a budget spreadsheet under “calculators” in this website. Otherwise the web is a great resource for budget templates.
Obviously having all this information in one place makes tax time easier also.
Look at your good debt (Assets) for Family home, education, savings, investments and Bad debt (liabilities) for credit cards, car loans, store cards etc.
To manage the bad debt pay off the one with the highest interest rate first. If you have any extra money put it on this and just pay the minimum on the lower interest rate debt. Once the highest is paid then work on the next costly one and so on.
Note everything and have fun with it. List your own ways you can use money more wisely.
Now identify you financial goals. Be specific with the amount and time frame you wish to achieve the goals. It is also important to be realistic. List them short term and long term. For example a long term goal may be to pay off a credit card, the short term goal is pay $100 per month.
Prioritise. Highlight the financial aims that are most important to you at this point in time.
Keep the goals close to your budget and create a “dream board” a visual representation of your goals. Visuals appeal to our emotions and we are more likely to be successful if we are emotionally motivated. Most importantly have FUN with it. Happy budgeting and goal setting!