Budgeting Goals Begins With A Realistic Budget Not Perfection
Setting budgeting goals is not a simple task especially if you aren’t sure what financial direction you are headed in.
The main goal of personal financial planning is to set yourself up financially for today and tomorrow. Full-stop.
Math is one of those subjects that you are either good at or you suck at it. Thankfully, I loved math and numbers but those of you who suffered budgeting may get swept under the rug.
Here’s the thing though, budgeting is easy and in many cases, there are budgeting apps that will run numbers for you.
But before you even attempt a budgeting app to do the dirty work you must understand your budgeting goals and the process.
Goal-based planning is your key to financial success or to stay successful with what you’ve already accomplished.
Work Your Budgeting Goals As Our Ancestors Did
They may not have been running around with debit cards, bank cards, credit cards, and rewards cards however they cam equipped with other ammunition.
Our ancestors learned to live from what they had which was the land, bartering, and any little money they earned or saved.
The process is no different today apart from technology, opportunities, and increased knowledge about financial processes.
To be honest, if our ancestors saw the way many of us take for granted what we have they’d certainly shake their heads.
We are in a much better place then they had ever been yet we’ve become spoiled to the convenience the life offers.
I still get a kick out of my mom who picks fruits for free from a neighbors yard in place of offering them free jam.
My dad would barter his electrical skills to his friends so he could get help fixing the car from his mechanic buddies.
My mum would also bake her magical British sponge cake for the local charity because it was inexpensive but delicious.
Learning from our parents who learned from their parents and so on can be a ripple effect as long as it’s meaningful and worthwhile.
More Money Doesn’t Make Your Richer
Just because you have a budget doesn’t mean that your money will work itself out in your best interest.
Also, the more money you make only allows you to have better opportunities than others.
Other than that, we’re all equals on our journey that takes us to the place we call our comfort zone.
When friends of ours tell us about the 5000 sq ft home they are moving into we are happy for them.
But for us, all we want is the comforts of a well lived-in home that fits our needs without wasting money on space.
Every Budget Needs A Money Manager
There needs to be a captain when a budget is involved and typically this person is the money manager.
I always equate a family budget to a business budget because just as a business must stay afloat so must your family.
When you don’t pay the bills your business will close or the mortgage company will ship you to the streets.
This has to be more than enough motivation to get you working on a budget but sadly many wait until it’s too late.
Paper and Pencil Started Our Budgeting Goals Journey
Setting up a budget for someone who has never done so in the past can be a stressful time.
That’s why I created my 10 step mini budgeting series for the person who wants to ease into the budget process.
There are many online budgeting apps available but from personal experience, I find starting with the paper and pencil method ideal.
Why? There’s something important about using a pencil and paper and focus when it comes to money, at least for us that was the case.
Our first budget was all done on paper in a book that we purchased from our local dollar store.
Believe it or not, it was helpful for both us, and one piece of our financial success that we can equally say was critical.
Budgeting Goals Come BEFORE You Jump
Some so many people want to dive into budgeting and think it will make them rich or become debt-free.
As nice as that sounds budgeting is far more complicated than having end goals without a starting plan.
This reminds me of people who want to join a diet plan and say they are starting tomorrow and yet have no idea what they are doing.
Life doesn’t work that way and if you think that someone online will guide your every step of the way you’re mistaken.
You have to, no you MUST take initiative when it comes to your financial journey to get from it what you desire.
I’ve had so many people come to me and say, “Mr. CBB my budget isn’t working’ or “I can’t balance my budget”.
There is a two-fold way I look at this because I’m happy they are seeking help but have they put the effort into their budget.
One of the worst things you can do besides not preparing for a budgeting journey is to set unrealistic budget expectations.
You’re only setting yourself up for budget failure which will only leave you going around and around the debt circle.
If you’ve had enough living with debt stress and not sure where you will find the money to pay your bills, then pay attention.
YOU can’t keep going on the way you are and you must stop with the excuses from day to day.
Lord only knows there have been many things in my life that I’ve had to do without just to get by.
Surviving University Shaped My Life’s Outlook
In University I never bought new clothes and books I would source used and at times lived on a friend’s couch because I was short cash.
My socks would have holes in the bottom so I’d double up to keep my feet warm but never throw those socks with holes away.
When you are struggling financially it’s tough to get rid of stuff you know you might need in the future, like my socks.
You see I was working in University to put myself through without debt and to do that meant living way below my means.
Did I graduate from University?
You’re darn right I did because my focus wasn’t on partying, girls, and staying up late.
The last thing I was going to do was waste my money partying when I had goals for my future.
I had set goals for myself all of which have come back in my favour throughout my 20’s, 30’s and now 40’s.
- Graduate with the best marks possible
- Work To Pay Rent and School then save what little I had left
- Sleep and Eat Healthily
Those times were tough and it pained me but it also made me a stronger person knowing that I can live without a cell phone for example.
I recently went almost 12 years without a mobile phone and the only reason I have one now is because of my colleagues and COVID-19.
Setting Goals Early On In Life Shaped My Future
By setting important goals when I was in university enabled me to build strengths to apply as a career man.
Achieving financial independence was in the cards for me from day one even though I felt dragged through the mud.
Anything I do or put my mind to I work hard to make sure I’m finding the best possible ways to get it done on time and the right way.
I work hard to pay the bills for my family and save for our future retirement and our son’s future needs.
Sleeping is important to our family which is why you will find is in bed by 8 pm almost every night.
We take family walks to the park or around the block, play sports to keep fit, and eat a healthy low-carb and keto diet.
Budgeting Goals Gave Us Freedom
Keep in mind that your goals whether they are life goals or budgeting goals will change often.
Be ready for change and embrace it as an opportunity to challenge something new in your life.
I moved to Canada when I was 29 years old and that was the biggest financial and life change I had ever made.
Building a life for myself and family has been challenging but we are now debt-free and couldn’t have done it without budgeting goals.
1. Monthly Personal Financial Audit
Without fail we do a monthly audit on everything we own from investments to making sure we complete a full budget analysis.
I guess it helps that we have this blog which holds us accountable for sharing our monthly budget update and net worth update.
Challenges always seem to be best for us and this blog offers us that motivation knowing that you’re waiting to find out how we made out.
Either way, go over all aspects of your finances once a month to make sure you are on the right track.
You may find in one area things aren’t going so smoothly and you need to regroup and figure out a plan of action.
This may be rebalancing the budget due to job loss, reduced hours, or loss of pay.
Talking is a good way to make sure your money is going to the right places and both you and your spouse are on the same page.
I often hear that only one person takes care of the finances in the household which is fine as long as you both understand what’s going on.
If you were to die tomorrow would your spouse be able to pick up where you left off?
Does he or she know all of the passwords to your bank accounts and utility accounts?
Where can all of your financial information be found?
These are topics of communication that need to be discussed and are critical especially during times of mourning.
Monthly we review our passwords and make sure that they work and sometimes even change them for good safety measures.
We also talk about purchases or renovations we’d like to make and plans for saving the money first.
Use this time to create the mold for your budgeting goals and to revamp what you already have if needed.
3. Meeting Budget Category Projections
This is an important topic for Mrs. CBB and I and one where we tend to suffer the most.
Our budget categories have monthly goals that we set in the form of how much we want to spend or can afford to spend.
If we don’t meet this target we must examine why and find ways to solve the problem before it gets out of hand.
We also do a yearly budget category wrap up where we see how we faired over the 12 months and use that data to build the next year’s budget.
4. Paying Ourselves First
Throughout the entire process of paying off our mortgage and any other debts that we had we always paid ourselves first.
This may be in the form of cash or through investing in our retirement investment funds such as our RRSP and TFSA.
Once we became debt-free we ramped out our savings goals, emergency savings and opened new investment accounts.
Any time you are budgeting think about the what if’s and how you will handle any type of financial need if it arrises.
For most people, a good start is building a 3-6 month emergency savings fund and keeping it in a separate bank such as Tangerine.
There are no fees involved with Tangerine and you always have online access to your money as we’ve been doing.
Once you’ve built your emergency savings you’re in a better place with your budgeting goals because you can move on to bigger goals.
5. Long-Term and Short-Term Goals
Whether you are currently debt-free or not you need long-term and short-term goals.
- Will your home be your retirement nest egg?
- When do you plan to sell your home to release the equity?
- Where will you live then?
Those are long-term goals but certainly, in the short-term, it’s important to consider other means of saving for your future needs.
For our short-term focus, we consider things that we would like to purchase or perhaps holidays we want to go on.
These types of short-term goals we save up for in a savings account with our projected expenses.
As for long-term goals they can get a bit trickier although we do know that we’d like to sell our house and move to the country.
We don’t necessarily want a bigger house but just more land to allow us to build a big vegetable garden in the summer.
Our financial investments are reviewed every month and yearly with our financial advisor at Manulife.
Having that open communication and completing a recent retirement portfolio assessment helped motivate us.
These budgeting short term and long term goals will be personal to us but I offer ours as an example.
Investing also is a form of paying yourself first although you don’t use the money until you retire.
Track Your Budgeting Goals For The Year
I created a free budget binder printable for any of you who are interested in documenting your budgeting goals as we do.
Go to the Free Budget Biner Printable section and look down the list for the pdf version to print.
Print it and then add it to your budget binder and visit it as often as you need to make changes.
Running numbers isn’t going to make you rich but it will keep you grounded and assist you to reach budgeting goals you want to achieve.
What this means is that you are the only person who knows what will make you happy financially so take your freedom and achieve it.
Your money, Your goals so take out that paper and pencil and start thinking about what your next month or year will look like.
Discussion: What type of budgeting goals do you set for yourself and how do you monitor them? Leave me your comments and questions below for a response. Thanks, Mr.CBB