The last few weeks in this series of posts on budgeting, we have explored different kinds of expenses and the impact they have on a budget. It is important to know where our money is going but it is also important to have goals regarding money. Otherwise, keeping a budget is just one more chore in a life that is already busy. The goals we set can be any size and for any purpose, for that matter we can have multiple goals of various sizes.
When I say set a budget goal, what is the first thing that comes to your mind? If you feel like it, please share your ideas in the comment section. For me the first thing that comes to mind is creating a savings account that acts as a security net. I work as a contractor going from one teaching job to the next. When I land a good job I get paid well, but every 1-2 years the gig is up and I need to land a new job. It is always possible to have gaps between employment. Therefore, my goal is to have enough to pay my bills between jobs so I have less stress when looking for a new job.
When I have the goal discussion with coworkers, family, and friends they all have different things that motivate them. Here is a list of the common ones:
- Pay off debt
- Retirement savings
- Dream vacation
- Down payment on a home
- Send children to college
I was first inspired to write about personal budgets because I read that most Americans don’t have enough in savings to cover an unexpected expense. A major contributor to this statistic is the fact that America is a credit society with many people using high interest credit cards to finance their lifestyle. Paying off debt is a common goal that people have so they can feel financially secure.
Depending on the size of a person’s debt, this goal can be both a large and small goal. For example, if a person has $20k in debt across multiple cards, loans, or car payments it can take a lot of time and discipline to pay off all the debt. Start small…pick one card to pay off. When the first card is paid off use the money in your budget for that payment to apply to another debt, rinse and repeat until all the debt is gone and you have met your larger goal. Next thing you know you can move to another goal of having an emergency savings fund.
Setting goals is important so that you can focus on making your money work for you. If you cannot define what you want you will never get what you want. So, I ask again, what is your goal?