[Budget Plan: Part 1] Set Your Goals

I always thought that I was good with finances. I try not to spend too much and I'd splurge on some things here and there, but I was confident I had complete control of my money. What I always avoided though, was seeing my cash flow on paper. As long as I wasn't in debt, and I was putting a little bit away, I felt like I was doing good. To some extent I guess I was, except I didn't always know where all my money was going.

Earlier this year I started obsessing over making a budget. I researched personal finance, how to make a budget, etc etc. A few dozen websites later, I was overwhelmed with hundreds of tips, strategies and financial jargon.

I like keeping things simple because complicated steps tend to dissuade me, and I feel like I cannot possibly be the only one who feels this way. So I tried compiling some of the tips and tricks (that works for me) and simplified the steps toward creating a realistic budget. The steps I follow are based on the Credit Counselling Society's "7 Steps that will help you build a budget that works". I tried to break the steps down and integrated some tips, tricks and roadblocks I encountered along the way.

STEP ONE: Define Your Financial Goals

There are a number of common goals that many of us share (maybe buying a car, paying off a mortgage, etc). However, how much we value a financial--or any other goal--depends heavily on how we prioritize the different things we want to attain in life. For example, while I ultimately want to be more financially secure, I know that I value life experience more. I also know that I both financial security and gaining life experience, to me, takes precedence to short term goals like buying a new vehicle. This might not be true for others. Some might have financial security (getting ready for retirement, paying the mortgage off) as their top priority, followed by getting a new truck, and so on. 

I believe that how we prioritize is very subjective. It depends on our own set of value systems. I also would like to think that, as long as our end goal is something progressive and positive, then there is no such thing as right or wrong set of priorities.

"The goals you set are yours; you have the power to choose what is important to you and 

design your goals accordingly. Most people’s money problems occur because they don’t 

clearly know what they want to do with their money and therefore spend it randomly."

What's very crucial in this step is to know what you really want to get out of life, and from there you can build your goals. Just think of goals as the smaller steps you take towards the life you want to lead. Also remember to make SMART goals (Specific, Measurable, Attainable, Relevant and Timely)!

Often (or at least for me), writing my goals down helps a lot. I like seeing it on paper, and I enjoy crossing them out after achieving them. Here's how you can write it out:

It seems silly sometimes, having to write it out. I always thought my financial goals were obvious and clear, but sometimes it's worth giving another serious look. Have you established your set of financial goals? How do you motivate yourself to keep at it?

Sources:
nomoredebts.org
TD Canada Trust