How To Budget For Short-Term and Long-Term Financial Goals
There are many ways to budget for your goals, and short-term financial goals may differ to your long-term goals. With various methods and savings accounts available it is best to understand all that you can access to help you achieve your financial goals.
In today’s financial climate we are more aware of our expenses and financial situations than ever before. With an increase in fuel bills, inflation, and more it is important, now more than ever, to ensure we are able to budget correctly. Of course, budgeting can only solve a few of the issues. Having a full understanding of your financial spending and how you allocate your money can help you plan for a better future.
Here at Schofield, we help people from all walks of life and age groups. If you are just starting out in your financial planning or you want to tweak how you budget and spend your money, keep reading.
What is a budget?
A budget is a set allowance you give yourself to spend on a particular item. Some expenses may be predetermined for you, such as rent, electricity and gas, or insurances. These figures when added up create your monthly expenses budget. Understanding where your money goes early on will help you assess where you can potentially cut back or re-assign your budget.
How can I budget my money?
There are many ways to budget your finances. With technology driving every industry forward it can seem like a minefield of information. The first step to budgeting is to simply write down each and every outgoing you have. Create a list of these expenses, and calculate the total amount per-month. This figure is what you know will be leaving your account each and every month. From there, write down every additional expense you have over the course of a month. This can be anything from a meal out, coffee, or those socks you needed to replace. With each cost, be sure to note what the spend was for. This will help you allocate the additional expenses and assess which ones were necessary. Separating your expenses will give you a clear picture on where your money goes and where you can provide cutbacks. When you look at allocating money for additional expenses make sure you stick to that goal. Keeping those targets in mind will allow you to make the savings to achieve your financial targets.
How can I budget for short-term goals?
When budgeting for short-term goals you need to ensure all your monthly expenses are paid. Once you have a left-over figure after all important expenses, you can then decide how you will segment the money. Consider what your short-term goal is and how much it will cost you. Divide that cost over a time frame in which you want to achieve that goal. That will be the cost you will put in a savings account which you can access without requiring notice from the bank or building society. To ensure this money is being put away into savings you can set up a standing order which goes out on a set day of each month. A quick tip for online banking is to hide the balance of that account on your online banking screen and only check on it periodically.
How can I budget for long-term goals?
Budgeting for long-term goals will work on a similar basis as suggested for your short-term goals. However, assess when it is likely that you will reach your long-term goal and consider putting those savings aside. There is potential to consider investment accounts which can help you build your savings quicker. These methods of saving can be complex, and so we recommend speaking with us before investing any money in other areas.
What can I do to protect myself from an unforeseen financial crisis?
There are many ways to protect yourself from unforeseen financial crisis, one of which is to take out a life insurance policy. This will protect you from any critical or terminal illness.
Another way to protect yourself financially is to have multiple savings accounts which you build up over time. For example, if your monthly outgoings are £2000. Have one savings account which you can easily access that you build up a few months’ worth of expenses in. Should you find yourself with a surprise bill you are more resilient to it.
Overall reaching your savings goal, whether it is long term or short, speaking to a financial adviser will help you manage your money. Our team of chartered independent financial advisers are here to help you reach your financial goals, contact us now.