When I was younger my dreams seemed so far away. I realize now that it was just that I didn’t fully understand how to make SMART goals, goals which were broken down into manageable and realistic steps. One of the things that always used to stop me achieving my goals back then was the money it invariably took to achieve my ambitious plans.
Today I ensure I account for the money each goal requires in my budget, having done research into how much it would cost and working out how long it would take me to save for it in turn. I then incorporate how long it takes me to save for each goal into the deadline for the goal itself. This holistic approach to goal setting has served me well.
In this series I’ll walk you through how to prevent spending damaging your dreams by helping you to create a budget which supports your life goals. Let’s get started!
How spending could be damaging your dreams
For the vast majority of my twenties I survived without any thought of a budget. I lived pay check to pay check and often ran out of money before the end of the month. Whilst this approach may be considered care free it certainly doesn’t feel like it when you run out of money! For example, if you have no entertainment budget money can be spent so fast you don’t even know where it has gone and before long you could well be relying on your credit card and piling up debt.
Another concerning circumstance of spending in this way is that, without a clear budget, you may not be able to save towards achieving your dreams – with your spending turning your goals (which were achievable) into unrealistic wishes. I realized that life was simply just too precious for me to sabotage it in that way. I needed to protect my dreams with everything I had. So every time I was tempted to overspend (and once my budget was created it was obvious when I was about to overspend) I remembered the passion and determination I had towards realizing my vision for my life.
Why creating goals is only part of the process
Creating the actual SMART (Specific Measurable Achievable Realistic and Timescaled) goal is only part of the process. In order for me to realize my goals I first needed to ensure that financially it was viable too. To me budgeting and goal setting are inextricably linked and once I combined my goals with my financial planning I felt incredibly empowered to design the life I longed for, knowing that I had accounted for every eventuality and that I was well on my way to achieving my dreams.
How you can make your finances work for you, supporting your goals
The good news is that it is relatively easy to make your finances work for you and have them support your goals, all you need is a pen, paper and calculator. Or (for the super organized) you simply need a spreadsheet and calculator. It really is that simple. And, ok, so I know this might be hard to believe, but it can be super fun too! In essence what you are doing is ensuring you realize your dreams – what could be more fun and exciting than that?
Stay tuned – next Monday we will cover what you need to consider when doing a budget and assessing your current spending.
Do you currently have a budget? Is it realistic and do you stick to it? Have you ever considered how much you would need to save to achieve your goals? Please share your thoughts in the comments below to gain encouragement, insight and support from our community, we’d love to hear from you.
‘How to Manage Your Money When You Don’t Have Any’ by Mr Erik Wecks