BUDGETING GOALS

Why do you want your budget? What are your long range financial goals? Do you want to start a savings account? Do you want to start investing? Are you saving for college? Retirement? Buying a house? Your budget should reflect these long range goals.

For example we decided we wanted to buy a house. Our first goal then was so pay down most of our debts. We used the debt reduction plan at Quicken to pay off our credit cards and car payment. We budgeted a certain amount each month to pay them off, more then we would usually budget. Therefore we also had to cut our budget in certain other areas like eating out.

That took two years. Then the next year we spent saving for the house while trying to stay out of debt. We put quite a bit more than 10% of our income into our savings account at this time. Most of it was the money with which we were paying our debts. We also started a 401K, which mortgage companies like to see. We closed on our house this month.

Now our goals for the next year are to save about 10% of our income, continue our 401K and survive the next year of mortgage payments without going into debt again, while I still stay home from work. So the money we were saving will be going to our mortgage payments since our house is more than our apartment was. I am planning to go to work next year once the kids are both in school full time, so then we will start our college planning and retirement planning.

Each season of your life will have new financial goals. Make sure they are reflected in your budget.