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Establishing a Budget: 8 Tips to Set and Achieve Your Budget Goals

How confident are you about your financial future?  If you are dealing with some uncertainty or have concerns, studies show that you are not alone.  Research suggests that while 60% of women worry they won’t have enough money to last through retirement, only one in three Americans have a detailed budget.  And as much as you hear and read about the importance of budgeting from parents, grandparents, financial advisors and the like, it appears we as women don’t step up to the plate to ensure our finances are on track.  Here are 8 easy tips to getting your budget started.

1. Get organized and establish a budget tracking system that works for you.

As you are probably aware there are a plethora of budgeting tools available.  A simple Google search will populate thousands of options that can add more confusion than clarity.  If getting started was so simple wouldn’t everyone have a budget?  What is important is that you find a solution that is right for you.  Maybe all you need to get organized is to create an Excel document where you list out all of your financial matters.  For some a printed monthly Word document that shows a summary of their financial picture will be sufficient.  You may be one that needs to write things down to feel organized so grab a trusty notebook and pen and start writing out your monthly income and expenses.   The important part of getting organized and starting a budget is not necessarily how you do it, it’s the act of simply getting started that matters.

2. Calculate your fixed expenses

Your fixed expenses are those that do not change each month.  This could include items like your mortgage or vehicle payment and utility bills.  It is important to understand what must come out of your budget each month before you can start planning for the variables.  These are great expenses to set up on an auto bill-pay system with the provider so you know that you will never miss a payment.

3. Estimate your variable expenses

Do you know how much you spend on groceries, gas and leisure activities each month?  If you don’t feel you have a good grasp on this odds are you are not alone.  It is the American way to spend outside of our means, and in order to change that we must understand where every dollar is going in our budget.  Take the average of the last 6 months of expenses and break them into categories such as food, gas, household items, clothing, restaurants, etc.  Account for what your spending habits have been, and be honest with yourself (that pair of shoes was not a household item even though we’re sure they’re fabulous!).  By working through this process you will see where you’re potentially spending too much and how you should allocate your funds going forward.

4. Pay yourself first

Now that you understand where your funds are being spent it is important to create an emergency fund for yourself.  Typically this should at the very least equal $1,000 so that when those pesky car repairs, home repairs or other emergencies needing immediate funds arise, it does not cause you to panic or take money from other areas that may not be as financially smart for your long-term goals.

5. Assess Your Debt

While there are some debts that are considered good to have when looking at your entire financial picture, there are some you should work to eliminate as soon as possible.  If you are paying high interest rates on credit cards for example, you should work to pay even a little extra each month to chip away at those expenses.  Even if you can only start with $5.00 extra per week, progress is progress.  To understand in detail the best debt solutions for your circumstance, you should consult with a financial advisor to look at your finances in a holistic way.

6. Save for retirement

No matter your age, if you are still in your working years you should be saving for retirement.  You should work towards saving 10% of your income to a retirement account.  To understand which type of retirement savings vehicle will work best for you, click here to learn more.  Be sure to meet with your financial advisor on a consistent basis to ensure your savings plan is in line with your goals and dreams.  The earlier you can start preparing, the better!

7. Set Goals

Yes, you read that right, the big G word – GOALS!  Setting financial goals is a necessary component to staying on track with your budget.  If you have a clear picture of the life you want to live and how you want your money to work for you, it is much easier to stay the course rather than fall off the savings wagon.  Afterall, imagining yourself in that beach side vacation house where you are surrounded by your loved ones makes that amazing pair of shoes not quite as irresistible right now!  Long term vision = greater results!

8. Re-evaluate Frequently

Now that you’ve got yourself organized, assessed your income and expenses, set a savings plan and started dreaming about your future, you need to give yourself a refresher here and there.  There are tools that your financial advisor can use to ensure your financial plan is in line with your goals and dreams.

To understand more about the unique challenges women confront in preparing for retirement and how to face them head-on to secure your financial future, click here to download our free ebook – A Woman with a Plan.

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This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Opinions expressed are those of the advisors at Sweet Financial Services and are not necessarily those of RJFS or Raymond James. All opinions are as of this date and are subject to change without notice. Every investor’s situation is unique, you should consider your investment goals, risk tolerance and time horizon before making any investment or financial decision. Prior to making an investment or financial decision, please consult with your financial advisor about your individual situation.

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