Setting Budget Goals

An important, but often neglected, step when budgeting is deciding what the goals of your budget at. That might seem like a silly thought as obviously your goals for your budget are to - well, budget. Right? Of course - but ultimately there’s usually a greater reason for your budgeting in the first place and usually that reason has something to do with saving money. Other times it may have more to do with paying down debt and still other times it can be a big lifestyle change that’s just on the horizon. We all budget to make sure we aren’t incurring more debt and that we’re saving money as well but it’s important to take a look at the greater reasons for doing those things.

Young couples may be saving up money for a wedding, newlyweds might save up for a down payment on a home or perhaps start being a little more careful with their money when a baby is on the way. Some couples may start saving for retirement, a trip, or a remodeling of the house while others may be working on paying down credit cards and loans. Young students may save up for travels, for a new car, or their first apartment. Individuals are wise to put money aside for emergencies, medical expenses, and unexpected bills. So there are really plenty of reasons to be budgeting but unless you know your specific ones your budget wont be very effective.

Instead of just blindly budgeting every month with no rhyme, reason, or method to it all try getting very precise about how and why you’re budgeting. Doing so will likely make budgeting much easier and less of weight on your finances.

For example, a while back I was cutting back on my spending habits and budgeting more so that I could save up for a redesign of my kitchen. I wanted new tile, new cupboards, new decor, and so on. It took a lot of saving on my part but I did eventually get there - I definitely wouldn’t have however if not for the tools that I used to keep myself motivated throughout the process.

See when you’re budgeting just to budget, without having a clear idea of the gains you’re getting from budgeting (other than not having any more debt) it’s pretty boring and unrewarding. All you’re seeing is the money you can’t spend. So instead what I did was I started planning and remodeling the kitchen as I went along. I would pick out tile, fabric, new furniture, new dishes and so on and post pictures of them in a little organizer I had to keep track of my budgeting - that way any time I went over my budget I wasn’t just seeing a bunch of numbers I had to keep track of - I was seeing my future kitchen slowly coming together.

Bit by bit I was able to go buy the things I wanted while saving for larger pieces and work I wanted done. It was much better than just seeing a little stockpile of money sitting in my bank account - and it made it that much easier to stick to my budget instead of spending the money on other things. I couldn’t spend money that wasn’t there - and it was much nicer to have part of my kitchen already done or in the process instead of waiting until I had all the money saved up before beginning any of the work.

It was so much easier to stick with my budget when I had tangible evidence of the results I was getting from it every time I walked into my kitchen. Instead of just seeing numbers on a screen that said I had kept within my budget I got to go to the store and come home with the rewards of all my hard work - how much more motivating is that?

So once you know what your goal is for having your budget - be it to reduce or eliminate your debt, save up for an engagement ring, buy a new flat screen, have an emergency fund, or whatever the the case may be, begin to set up visual signs of progress on your goal.

You can do this by keeping tally sheets or progress charts that show how much money you’ve saved or debt you’ve reduced. A favorite of mine is the thermometer style poster that grows (or decreases depending on your goal) as you make progress. It’s similar to those christmas calendars that have little windows with a piece of chocolate in them for each day - it’s something to mark the steps you take towards your goal, and each day has a little reward for getting closer.

It’s also a good idea to have vivid reminders of what your goal is so you can keep your focus on that and off all the other money you might be wanting to spend. These reminders can really be anything so it’s up to you to get creative. If your goal is to eliminate your debt then print out a statement of your credit cards or loans and then white out the total to say zero and make some copies of it. Put those all around your house, in your car, and wherever you spend a lot of time so that every day you’ll see them and be focused on them. If your goals are bigger, or perhaps you have several, it’s a wise idea to create a board with pictures of all the different things you want to accomplish from your budgeting. If that’s a new car, put a picture of the car you want up. If you want to be able to work less or vacation more then put up pictures of yourself relaxing at home, with family, with friends, or some brochures to vacation spots you want to hit up.

Having these things around to motivate you can make the difference between reaching your goals or getting discouraged and giving up on your budget entirely. Little successes that you can celebrate are enormously helpful - as are giving yourself small rewards throughout the process. My rewards were being able to go out and purchase things for my new kitchen. Perhaps your reward is simply seeing your goal move closer and closer - but you can also have more tangible rewards too. I have friends that give themselves small “treats” such as a visit to the spa, a new movie, or other little things for sticking to their budget throughout the month. It doesn’t have to be anything fancy or expensive (in fact that would pretty much defeat the whole point of budgeting in the first place) but just a little reminder that you’re on course and you’re doing a good job can be really helpful in keeping yourself on track.

It’s also really important to have your goals clearly written down and to have a set completion date. If your goal isn’t specific and you don’t have a set date then you won’t have any idea if and when you complete your goal and you’ll just go on budgeting without any purpose to it - and no one really wants that. Write your goal down clearly and precisely in just one or two sentences and post it in all the same place that you put your visual reminders of your goals so that you can see it every day. This will ensure that you stay focused on your goal as well as having visual reminders of what you’re working towards.

So now that you have your goals for your budget written down, as well as reminders of what you’re working towards, and you’re rewarding yourself for your small successes - what you essentially have is a system to keep you on track for your goals. Like any other system there are going to be things that work and don’t work for you so it’s important that you tailor it to fit your needs. Maybe you need more than just reminders of your goals to keep you focused - in that case a budgeting buddy or partner is a good idea. Perhaps you need more measurable signs of progress towards your goal - this might mean actually taking money out of the bank and putting it in a jar or a container in your home that you can watch fill up. The idea is to do whatever works best for you so that you can get to your goal as easily as possible. If you put the time in to develop a system that works really well for you it can become a life-long tool that can assist you in the completion of all sorts of goals far beyond budget and finance based ones.

Use this system to make your budgeting goals that much easier to achieve and you’ll definitely see some remarkable results in your efforts. Just remember to be precise and keep yourself motived and soon you’ll be achieving your goals in the blink of an eye. Have fun and good luck!