A New Year inspires change for the better, and what could better than having a budget which skyrockets you to your goals, or perhaps even exceeds them? You may have already made budgeting goals to save money for retirement, a home, vacation, etc. But have you actively written down your financial goals and made them a part of your plan?
What is your goal?
Budgets should be made with both short term and lifelong goals in mind; keeping them in the forefront of your mind while creating a yearly or monthly budget will keep you motivated to keep going.
Short Term Goals:
Short term goals such as paying off debt, saving money for an emergency fund or a vacation, or even a larger down payment on a home.
Lifelong goals have your future in mind. They include sacrifices you make now in order to have a better life down the road. Goals such as: growing your savings account, saving for retirement, or using income now to invest.
Breaking it down – What to include in your 2018 budget:
Review what you spent last year to help predict what this year will be like. You know you’ll spend on ordinary expenses like housing, insurance, utilities, transportation, holiday spending, charitable giving, etc. Go back through bank statements or your online bank account and calculate your needs. This is where you can include your short and long term savings goals.
2. “Unexpected” Expenses
You can’t plan for everything, but you should always expect the unexpected. Life is never perfect so it is wise to leave yourself a buffer in your budget in case things go wrong.
An emergency fund made up of 3-6 months’ worth of expenses, or more, is ideal in case you lose a source of income, a car breaks down or other unexpected expenses arise. Having a financial buffer to lessen the blow of those possibilities can relieve a lot of stress during a financial surprise.
3. Freedom to Have Fun!
Not all surprises are bad, either. Allow yourself some room for spontaneity, say yes to that concert you just found out about, surprise someone with a gift that will make them happy or help them out. A budget isn’t to restrict you, it’s to show us what’s possible and how we can make it happen!
Contact PRM with your mortgage related questions and how your budget relates to a new or current mortgage. We’re here to answer your questions! We look forward to hearing from you!