Imagine what you would like to do with your money. What do you see?
Do you see a future free of financial worries? Are there specific items you want to buy? If so, you need to set specific goals for how to use your money.
Good money management begins with setting goals. Goals give you direction, a purpose for the way you spend your money and the way you live.
Goals motivate and encourage you. Goals are dreams or wishes that could come true. If your goals are specific enough, you will be motivated to balance your spending and savings to reach your goals.
If you don’t set goals, you’ll find yourself wishing you had. The idea of goal setting is to specifically decide what you want. Goals should be set and reconsidered periodically because they can change.
Take some time to think, then write down your financial goals.
• Short term goals (to be met within the next year or so).
• Intermediate goals (that can be reached within five years).
• Long term goals (these goals take the longest to achieve, 10 to 15 years or longer).
Once you have identified your goals:
• Determine how long you need to realize each goal and the money you need to put aside to reach your goals.
• Develop a plan for achieving your goals.
• Set aside a weekly or monthly amount that needs to be saved to meet a particular goal.
Goals guide you. Remember, they are an important key to successful money management. Goals can help you achieve your dreams within a specific period of time. They help you to use your money to do the things that are important to you.
After goals are listed and prioritized, a workable budget should be devised. This plan for spending and saving first requires an estimate of income and expenditures. For best results, a budget should not be too complicated or rigid, but must be realistic.
Develop a realistic budget
Now that you have listed your goals you have completed the first step in your spending plan. The next step in making a budget is estimating your family’s income. Before you can plan wisely, you need to know how much money you will have during the planned period.
Source: Credit Canada Debt Solutions, a non-profit charitable organization.