For more budgeting articles in this series, click HERE.
Budgeting Step Two: Determine Your Financial Goals
You began the first step of budgeting by finding out where your money is going. Now it’s time for step two of budgeting: determine your financial goals. Everybody has financial goals because everybody has a life. Life comes with bills, receipts, and a wish list! Once you know where your money is actually going, you can redirect it and give it purpose.
Were you surprised to find out where YOUR money is going? Most people are. I would love to hear your comments on what you found by doing the exercise in step one. Leave a comment below.
Now, once you know where your money is going and what you are spending, what are your financial goals? Do your financial goals match what you are currently spending your money on? Or do you sense that you may need to re-focus your financial habits?
Financial Goal Setting
After my husband Bradford and I were students in Dave Ramsey’s Financial Peace University, we came up with a financial goal setting plan that looked challenging but do-able for our family. Learn how to set SMART goals HERE (Goals that are Specific, Measurable, Attainable, Relevant, and Timely.)
- Start budgeting
- Get out of debt
- Build an emergency fund
- Begin investing
- Give more than ever before
More specifically, we knew that we had our children’s college funds to begin saving toward. There was a lot to consider as we began to regroup and approach our income from an entirely different perspective.
I must admit, I’m a planner and a list maker. I feel a tremendous sense of accomplishment at just putting goals down on paper. God is a planner too, and He is a God of order. I just love this verse from the book of Psalms that speaks on planning and having goals.
“May He give you the desire of your heart and make all your plans succeed.” (Psalm 20:4)
ACTION STEP: How can your plans succeed if you don’t have any? The only way to strive toward a goal is to have one. The one thing I have learned through money management and planning is that if I plan something and have a target I am aiming for, I am much more likely to hit it. I know exactly what I need to do to get there, and I can set a deadline for when I hope to reach it. It keeps me motivated and gives me good things to look forward to, even in this rough economy. Write down your financial goals for your family. (We used Dave’s Financial Peace Planner.) After seeing your household’s cash flow stream, what do you want to change, or keep doing the same, in order to reach these goals?
If you’re ready to move forward, go to Step Three: How to Create a Household Budget HERE.
If you are viewing this in a reader or via email, click here to see this posts comments.
A few months ago, we were in the a mode where we were willing to pay for services because we were so time crunched. But now, we have more energy and are doing those things for ourselves after the kids go to sleep. The energy comes from 1. having our youngest sleeping through the night 🙂 and 2. motivation to pay off the house in less than 4 years. I am also making the time to coupon to squeeze money out for those extra principle payments and reminding myself what I buy today is costing me the price of that item/service + my mortgage interest (6%). So right now our financial goals is focused around paying off the house!
Hi. You have a nice blog here. And great tips! I’ve been keeping a spreadsheet of our expenses for nearly 2 years; it’s a great way to budget and know where the money is going.
Our financials goals are to pay off debts and build an emergency fund. Due to circumstances beyond our control we built up a lot of debt in 2008, and now that my husband has a new job, we’re focusing our attention on paying those off and rebuilding our savings accounts.
I have no debt – not even a house note – I paid cash for my condo 5 years ago however, my goal is now to have a house free and clear of any association fees and a back yard for my kids. Tough when the housing market is in such bad shape and no one who has a decent house at an affordable price is selling.
What an all ’round amazingly written blog
This makes great sense to me!
I don’t disagree with this writing..
Given that Faithful Provisions does a great deal to help people with little savings day by day, this series on budgeting really puts those small decisions in perspective over a longer period of time. Your break up of steps in budgeting is great, and I appreciate that this article in particular advocates prioritizing goals and developing them according to the Bible with Psalms 20:4 (another of my favorites is Psalm 37:3-6) while still seeing room for families to develop their own unique financial goals.
Different financial advisers and sites develop the concept of goal-planning differently, and this one stands out as one to recommend. I couldn’t agree more with Dave Ramsay and his goal prioritization.