Tuesday, August 16, 2016

Budgeting 101, Day 2

So yesterday we talked about why it's important to budget and answered some basic questions.  Now, today we will focus on Goals and priorities.  Once again there are a number of questions that need to be answered, with the very obvious questions what the heck is a goal and what is a priority?  How are they different?  Why do they matter when it comes to creating a budget?

Day 2:  Goals Vs. Priorities
We are going to answer these questions and hopefully give you a great foundation so that you can figure out what is truly important to you in regards to your financial future.  
What is a goal?
What is a priority?
Why does this matter?
Why do you need to know the difference?
Why is this important when it comes time to create a budget?

A goal is an observable and measurable end result with one or more objectives that are achieves within a certain timeframe.  

A priority is a goal that takes precedence over all others.

When it comes to a budget it is important to realize that you are going to have financial goals but you are going to have to prioritize those goals and figure out what is truly important to you.  Which means you will have to make sacrifices and if your goal is to start saving for a home improvement project then you need to prioritize savings and figure out a budget that allows you to do that.  

How does one figure out their goals and what to make a priority?  

There are several ways to create goals - you can use the S.M.A.R.T. method.- what the heck is that?  Why should I use this method when creating financial goals?
If you’re in direct sales then you have probably already heard about SMART goals.  
OR you can use the method Charlene Johnson recommends in her FREE 30-day PUSH Challenge.  Either way is fine.  

Specific  - What exactly what is to be done with the money involved?
Measurable - Exact dollar amount?
Attainable  -  Determine how it can be reached, which is often determined by your budget
Relevant - Is it attainable?  Is it realistic?  Are you able to achieve it?
Time bound - what is your deadline?  Be very specific and determine when the goal needs to be reached.

You can find worksheets online along with more information on creating SMART goals - seriously, Google it and tons of information will pop up.  Here is an example of a financial SMART goal:
Build a 3 months emergency savings fund ($10K) over the next year.
Is this attainable?  Is this realistic?  

Chalene Johnson’s PUSH method - 
This is how you create your goals each week:
**Create a list of 10 goals EVERY week.
Same date/time every week
1. Something nearly impossible but possible
-Do not set a goal that you KNOW you will achieve
-Not something that’s a stretch
-Something that makes you slightly uncomfortable
-Outlandish BUT not unreasonable
2. Come up with a KEY PRIORITY and then reread that statement and make sure your   
 goals align with that statement
3. Written as if you already accomplished them
- I am exercising 
- I am earning
4. Measure
-Write them out in such a way they are NOT ambiguous
-My goal is to exercise 5 days a week.  
-I have earned ________ dollars
-I am enjoying a date night with my husband once a week every month
-You need to set an end date for it so you can say I nailed it.
*The more specific you are the more likely you are to accomplish them.
****Don’t forget at least 1 goal is meant to be FINANCIAL!

I HIGHLY recommend that you take Chalene’s course.  It is FREE and you can find it over at her website ChaleneJohnson.com.  I will post a link on the creditsavvydiva group wall.  If you haven’t taken it yet this could really help you to figure out your priorities and where you want to focus your attention, both in life AND FINANCIALLY!

No matter what your financial situation and no matter what your goals are, you must keep them in mind when creating your budget.  Otherwise your money isn’t going to be working for you and you’re still going to be wondering where it went at the end of the month.  Yes the bills are paid but that cash left over… where did it go?  Did it go into savings or did you throw it into a discretionary fund?  Did you just spend it because it was there?  well… probably.  So set some goals  Figure out what your priorities are.  Then write them down, make them attainable and then put them into action so you can achieve them!  Seriously, it isn’t difficult.  

Tomorrow we will discuss necessary verses arbitrary expenses and why when creating a budget it is important to figure out what you must pay and what you are willing to give up in order to achieve your goals.  DO you want to give up anything?  What are you willing to do in order to make sure you are living within your means and not go over budget each week/month?  Is there something you absolutely won’t give up?  We’ll talk about it tomorrow.  

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