Assess Yourself and Your Values

The first step in starting to budget is to perform a self-assessment of your spending habits and financial goals.  There is no one-size-fits-all, cookie-cutter budget that everyone must follow.  We all have different values that shape how we like to spend our money.  For example, maybe fitness is very important to you, and your monthly gym membership fee is a non-negotiable expense.  Maybe your monthly food allotment is a bit higher because you really enjoy eating out with friends on the weekends.  It is important to remember that your budget can include room for almost anything that is important to you, but probably not everything you want.  Some sacrifices may have to be made in other areas.  However, a budget should not feel like a constraint.  It provides you with the structure to ensure that you reach your financial goals.

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Setting SMART goals is a great way to ensure that you take the steps to reach your desired financial future based on your values.

Specific

Measurable

Attainable

Realistic

Timely

Your goals can be short-term or long-term.  Think about where you might see yourself financially in 10 years, 20 years, 30 years.  What about a couple of financial goals that you might want to achieve next year?  By mapping out these goals as SMART goals, you will have a roadmap to successful goal attainment.

A goal without a plan is just a wish.  For example, saying you want to pay off your credit card debt is not as effective as creating a SMART goal to pay off this debt.

  1. "My credit card debt is spread between these three cards..." (specific)
  2. "On each of the three cards, I owe x amount..." (measurable)
  3. "I will take a portion of my paycheck and pay off this x amount each month..." (attainable)
  4. "According to my budget, I can afford this move and it will help me live more comfortably..." (realistic)
  5. "With this plan, my credit card debt should be paid off within the next year..."  (timely)

Setting SMART goals is a natural first step to developing an effective and sustainable budget.

 

Optional Activity: Try out SMART goal planning with some Savings Goals Download Try out SMART goal planning with some Savings Goals