turning your dreams into reality

Why spending could be damaging your dreams; How to create a budget that supports your life goals Part Four

Photo courtesy of Shutterstock

Photo courtesy of Shutterstock

 

Last week we examined how to cut back on spending and create a life goals budget, this week we look at how to create a monthly savings budget, how to budget with cash envelopes and explore how to evaluate your earnings strategically.

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 144 times – 17 KB

 

Monthly savings budget – five year plan

 

Now plan how you are going to allocate your savings to your goals each month, using the life goals budget as guidance to when you will start saving and for how long. Also bare in mind when the goal is due to be completed and take into account the more minor things you will need to save for like birthdays, anniversaries or Christmas. This is the stage where you will clearly see how you are able to realize your goals financially and it is an incredibly powerful exercise, one which will empower you to create the life you long for!

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Budgeting in action: open three instant savings accounts and name them after your goals

Now that you have a brand spanking new budget what better than to organize your savings by opening three new instant savings accounts to celebrate? This will allow you to keep track of how much you have saved up for each goal and means that you won’t ever get the purpose of which monies are for which goals confused and thereby leaving you short changed for completing a goal.

 

I personally have five savings accounts and they are named:

 

  1. Car Savings (for my insurance, MOT, services and maintenance)
  2. Peter Trip (money to see my boyfriend as we live long distance)
  3. America
  4. South Africa
  5. Website (stay tuned – they’ll be a big redesign next year!)

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Budgeting in action: Finish your life goals budget

Please download Accessible Psychology’s ‘Financial Budgeting Spreadsheet’ below, to take part in today’s exercise:

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 144 times – 17 KB

 

Life Goals Budget, Part Two
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Why spending could be damaging your dreams; How to create a budget that supports your life goals Part Three

Photo courtesy of Shutterstock

Photo courtesy of Shutterstock

 

Last week we explored what to consider when creating a budget and assessing your current spending. This week we examine how to cut back on spending and how to create a life goals budget.

 

Cutting back on spending

 

Once I honestly assessed my current spending I evaluated what I could cut back on and drew up a revised monthly expenditure sheet. Although I felt a strong inclination to make major, often unrealistic, cut backs, I knew I had to be practical in terms of what I needed to live on whilst also being thriftier with my monthly spending. I also made a plan to pay off all debt, a non negotiable element of any budget.

 

To do this yourself, simply use the second column on the first sheet of my downloadable spreadsheet.

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 144 times – 17 KB

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What to do if you’re not saving enough to achieve your goals (SPOILER: There’s always a way to achieve your dreams!)

How long will it take for you to pay off your debt? When can you start to save and how much will you be saving each month? After doing your life goals budget are your monthly savings enough to fulfill your goals? If not reconsider what you can cut back on so you can save more each month. If you simply want to achieve them but could wait a little extra time to do so you could contemplate taking longer to complete your goals.

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Budgeting in action: research and create a ‘Life Goals Budget’

Please download Accessible Psychology’s ‘Financial Budgeting Spreadsheet’ below, to take part in today’s exercise:

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 144 times – 17 KB

 

Life Goals Budget, Part One

 

Now for the super fun part! Research your top three life goals and how much they will realistically cost. Then enter in the amount you will need to save, entering in when you will start saving.

 

Remember to pay off all debt before saving (this is a goal in itself) and to save for things like six months worth of living expenses, pensions and insurances as well as your life goals.

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Budgeting in action: read ‘How to Turn Your Dreams into Reality’ and create three life goals

One of the biggest contributors to long-term happiness is feeling a sense of progress in life and having goals is by far the best way to achieve the happiness that so many of us desire. What do you love to do? What have you never done but would like to try? What do you dream about being possible for you?

 

Once you have your three goals we can then go about budgeting for them to make achieving them even more obtainable – a critical step that many goal setters skip!

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Why spending could be damaging your dreams; How to create a budget that supports your life goals Part Two

Photo courtesy of Shutterstock

Photo courtesy of Shutterstock

 

Last week we looked at how your spending could be damaging your dreams, this week we explore what to consider when creating a budget.

 

What you need to consider when doing your budget

 

There are many things you need to consider when creating a budget. Firstly you need to accommodate for the unexpected, such as what you would do if you lost your job. Do you have enough savings? Typically financial experts advise to save six months worth of living expenses to cover us for such an event.

 

Other things to consider are the different types of insurance, pension plans, medical cover, car costs and car emergency fund for repairs. Below is a brief list of these things so you can do your research and get the necessary cover. Whilst you might not think all of these things necessary it is well worth seriously considering acquiring them as it could save you being in a precarious financial position in future.

 

  • 6 month living costs emergency fund
  • Pension
  • Joining a work union (monthly fee)
  • Life / critical illness insurance
  • Work, lost earnings insurance
  • Medical cover
  • Car savings and annual car expenses

 

The next stage is ascertaining your monthly expenses.

 

Assessing spending (current), incorporating paying off debt monthly

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What does financial freedom and security mean for you?

Take five minutes to think about what financial freedom would look like for you. How much money would you have in savings? What goals would you want to save up for? Would you start contributing to a pension or contribute more to your existing pension? What insurances would you want to get should the worst happen? Would you want to save money for your children?

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Budgeting in action: list how in control of your goals you feel

To me budgeting is just another way to empower ourselves towards a secure future and the fulfillment of our life goals. So how in control of your goals – financial or otherwise – do you feel?

 

To help you answer this question, rate the following five statements, scoring yourself between 1-10, with 1 being completely true and 10 being completely false.

 

  1. I have not officially written down my financial and life goals
  2. I have not considered or researched how much my goals will cost to fulfill
  3. I have not broken down my goals into manageable and tangible steps
  4. I have not created deadlines for either my goals or there interim steps
  5. I have not allocated time towards working upon my goals on a daily or weekly basis

 

If you score more less than 25 you have little control over your goals and can greatly benefit from closely following this series and doing the practical exercises – as well as reading my article on goals titled ‘How to Turn Your Dreams into Reality’.

 

If you score more than 25 you have moderate control of your goals but you will gain a greater level of mastery by following this series – as well as reading my article on goals titled ‘How to Turn Your Dreams into Reality’.

 

If you score 35 or more you have a good level of control over your goals, though to acquire complete goal mastery you could fill out the exercises for the downloadable spreadsheet and read the posts – as well as reading my article on goals titled ‘How to Turn Your Dreams into Reality’.

 

Remember working towards financial freedom means turning your dreams into reality – what could be more worthwhile than that?

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