Using a Budget to Set Long Term Goals
Setting goals for education, retirement, or a new home
As you begin to feel comfortable using a budget, your budget will help you not only to spend within your means, but also to plan for long term goals. Setting long term goals, such as saving for retirement or securing a mortgage, can be quite daunting, when you look at how much they cost. However, when you break up the cost into manageable monthly amounts, you can begin to take steps to achieve even ambitious financial goals. It’s that first step that is a doozy, but if you commit yourself and take the leap to be financially sound you’ll end up at your goal before you know it.
Once you have identified your goals, determine the timeline for achieving your goals. Calculate how much you need to save each month to reach your goals. With that information, you can then review your budget and begin looking for areas to reduce your spending and begin saving for that new home, that big vacation, or paying off your student loans.
|Goal||Timeline||Cost|| Month Savings |
|Down Payment for Mortgage||5 yrs||$20,000||$333.33||Save & establish credit||1|
|Pay off Student Debt||3 yrs||$10,000||$277.78||Increase monthly payments||2|
|Trip to Europe||10 yrs||$5,000||$41.67||Cancel cable TV package||4|
|Add to Retirement Savings||25 yrs||$75,000||$250.00||Cut expenses||3|
Don’t neglect planning for your retirement. The earlier you get started, the less you have to budget each month to build a sizeable nest-egg.
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