Do you have budget goals? If you don’t (or maybe you have no idea what it means), it’s time for you to understand what it can do for your finances.
Most people would just focus on having a budget plan. They take their net income and monthly expenses. Then they make sure that their expenses do not go beyond their income. That’s what budgeting is all about right?
This is not true. There’s so much more to budgeting than merely keeping track of your expenses. It can do more than just help you regain financial control by helping you monitor your income and expenses.
It can improve your current financial position. It can improve how you manage your finances. But only if you know how to use it correctly. Monitoring your income and expenses will help you make financial decisions. But incorporating budget goals in your monthly plan – that’s how you can bring about real improvement.
This is an important realization, especially during these times. The combined effects of the pandemic and recession have pulled a lot of Americans back financially. Households have suddenly been plunged in more debt. Workers have lost their jobs. Businesses have shut down permanently. People are forced to pay huge amounts of medical bills – at least, those that got sick.
All of these have put household finances in a not so ideal situation. If you want to survive this financial crisis, you have to use your budget plan to help improve your current finances.
3 budget goals you should try to reach during a crisis
Budget goals are specific entries in your budget plan that will focus on areas in your finances that you can improve.
Here are examples of goals that you can put in your budget plan – specifically those that can help you get through this current crisis.
Replenish your emergency funds
Do you think it’s hard to boost your emergency fund during a crisis? It’s not impossible! Just ask 74% of the Millennials who was able to stash a more substantial amount in their emergency fund. You see, when the lockdown and quarantine happened, people were forced to stay at home. Households with families may have spent more on groceries and home-based entertainment – to help keep their kids safe and occupied. But this did not extend to millennials. It seems like a huge portion of their money goes to entertainment expenses. So when the lockdown happened, they were really able to save a lot of money.
Think about that for a second. While you still can, keep strengthening your emergency fund. Because if the crisis continues to get worse, that fund will prove to be very useful in helping you survive.
Admittedly, this will be a hard task. This is why you have to plot it as one of your budget goals. That way, you will consider it a priority in your budget plan.
Keep paying off your debts
Another important budget goal that you need to focus on is your debts. You need to find a way to pay off debt faster. The longer it takes for you to completely pay off your balance, the more you pay towards the interest. This is money that you don’t want to waste on interest. So if you can get rid of your debts, you have to identify this as one of your budget goals.
If you don’t have enough money to pay off your debts, you have to rank it according to priority. On top of the list are the good debts that you have – like your mortgage payments. Next to that are the high-interest rate debts. Your goal here is to avoid wasting money on interest rates. So it’s better to get rid of these high-interest ones first. Only then you can focus on low-interest debts.
You should consider talking to your creditors and lenders to check if you can negotiate your debts. Try to convince them to lower your interest rates or waive some of the fees you have to pay.
Buy the best value for your money
This is not really something that you can put in your budget plan as a specific budget goal. But this is very important if you want to improve your financial situation. This simply means you have to start spending your money wisely.
The truth is, your finances will improve, not because you keep increasing your income. It will improve once you learn how to spend your money wisely. This is why you have to develop the right spending habits. It doesn’t mean you have to buy only whatever is the cheapest. It’s actually more important for you to get whatever will give you the best value for your money.
Sometimes, cheaper is not always better because it doesn’t have the quality that will make it last for a long time. If you have to keep on changing it, that will end up costing you more money in the future.
Scrutinize the expenses that you use in your budget plan. Make sure that all of the expenses you spend on, it has to give you value. If not, change it. Or find a better one.
Tips to help reach your budget goals despite a crisis
Once you have set your budget goals, you’re not yet done. What’s next is hard work. Now it’s time for you to try to reach the goals that you’ve set.
Why is this important? Because you want to be prepared for any event – especially those that will compromise your financial situation. Take a look at current events. If something like this happened again, how will you survive? According to reports, 27 million Americans admitted that they didn’t have enough to eat in the last few days.
That’s how devastating the pandemic and recession is. We all know that something as bad as this event can happen one after the other. You have to make sure you are prepared for the worst-case scenario.
One way to do this is to make sure you stick to your budget goals. Here are tips that will help you do this.
Stick to your monthly budget
The first thing you have to do is to ensure that you stick to your budget plan. No matter how much thought you put into this plan, if you can’t follow it, then there’s no sense in you creating it in the first place. Just follow this plan so you can meet every single goal that you put in there. You have to be disciplined enough to exert the self-control that will make it happen.
Add to your income
Another thing you can do is add to your monthly income. Budget goals usually need to be funded. If you have sufficient income, you can easily save up and reach these goals. But that’s not the only benefit. Adding to your income will also make your finances more secure. This is especially true if you can open a new source of income. When you have more than one source, you won’t stress over the fact that your day job may be in danger. You can lose one source and still have another one coming in.