subject: Planning Your Family Household Budget & Your Yearly Goals [print this page] Planning Your Family Household Budget & Your Yearly Goals
In today's world, with the economy in the state it's in, most of us are finding ourselves with more expenses and less money. We are having to take a look at our income, expenses, and family financial goals and strategies more than ever before. And many of us recognize that we must make some changes in the way we handle our family's finances, budget planning and money management. But how should we go about this? How can we make the changes that will enable us to reach our long-term goals?
The first thought that comes to mind may be that we should be making some new financial resolutions. Many financial experts, including FoxBusiness.com, talk about resolutions and about setting financial goals. We're told to set short, intermediate and long-term goals. They say "consider which places and actions will allow you to reach your identified financial goals." And, that's all the information we typically get.
Your own experience probably matches that of the rest of the population: resolutions usually don't work. And psychologists agree: general, and vague, long-term goals are seldom reached. Having a positive attitude and associating with positive-minded people is always a good idea, but ultimately, that's not enough to change a bad situation or solve a financial problem.
Making a decision and the commitment to doing something specific must come first--followed by taking action on that decision. And the very best first step on your way to accomplish a financial goal is to make a commitment to create an annual family budget, perhaps throught the use of home budget software, an Excel family budget spreadsheet, or similar budget worksheets. Those who have had success with their own household budgeting and creating an annual family budget tell us that they've learned to handle their goals through step-by-step instruction. And successful budgeting is not, as they say, "rocket science."
What, then, does work for reaching financial goals?
Let's suppose that you and your family have a need for something--a new car, for example. Your first objective may be to save enough money for a down payment. This milestone may be so large however, that sub-consciously, your mind might be overwhelmed and just unable take any action at all. Or, you may tell yourself "there's plenty of time to save that money," and you put it off. Ultimately, nothing happens. This is the major flaw in the process of making resolutions: they are often way too large and too vague.
The process to take in successfully accomplishing your financial decisions is simple:
1. Consider your goal and break that goal down into discrete milestones. If you need a new car, for example, perhaps you may decide your first milestone is discovering how and where you can save money for your down-payment. Milestones must be established in a reasonable and practical way--decide precisely what major steps must happen over what period of time in order to reach each goal.
2. Break each milestone into specific actions, tasks you can actually see yourself accomplishing. You might decide that your first action, in this example, is to buy a small notebook into which you can record everything you spend daily. This way you can see where to cut back in order to save down-payment money. This record can also help you in managing your monthly household budget and the family money.
3. Put each action step into your calendar, ideally with a time, as an appointment with yourself that you will not break. Perhaps you put into your calendar that you'll buy your "expenditures notebook" tomorrow on your lunch break and immediately begin recording everything you spend.
4. Accomplish each action as you've promised yourself.
5. Make adjustments in your planning and scheduling as needed to reach each milestone, and your goal. Don't forget you can always seek the advice of a professional financial planner if your situation seems overly complex.
This is the only way to make personal finance goals happen:
Repeat, over and over, until you reach each goal. Everything in this formula MUST be included in this process. And remember to make each action step small and discrete, so you can achieve it easily without becoming overwhelmed.
Forget resolutions and stick with goals, which you can easily make and take action on any time, not just at the beginning of each new year.
