How to Easily Crush Your Goals With a Budget

Oftentimes when people hear the word budget, they curl up inside as they start to imagine all the fun things they won’t be able to do anymore. I’m here to stand up for the budget! But when done correctly, a budget does the exact opposite, it helps curate your dream life. 

So let’s dream a little. If money wasn’t a factor, what would your life look like? Would you move to the beach? Go back to school? Upgrade your car? Whatever you want to achieve in life, here’s how you can utilize a budget to help you achieve real results.

Set SMART Goals

If anything is true, it’s that you can’t get somewhere if you don’t know where you are going, the same goes for your goals! This may not be the first time you are hearing about SMART goals but if it is, you want your goal to meet the following criteria:

Specific - make your goals specific.

Measurable - define how you’ll know if you are making progress.

Attainable - make it something that’s actually attainable.

Relevant - align with your values and long-term objectives.

Time-based - be clear and realistic on your end-date.

When you create goals, you’ll want to calculate how much it will cost. Whether you’re paying off debt or running a marathon, your goal will require a set amount of money. Set some time aside to ensure you’ll be able to reflect on your goals without interruptions. Bonus points if you get cozy with your favorite beverage as you dream.

Adjust Categories to Save for Targets

Once we have our SMART goals, it’s important to look at your budget to financially account for this new goal. If you are thinking to yourself, ‘what budget?’ then don’t sweat! Simply look at all of your planned money going out of your accounts (in the form of bills, household expenses and cost of living) compared to your income. 

If you have a plan to run a marathon this year and you want to start going to the gym, you’ll want to save for your membership, a new pair of shoes and miscellaneous expenses as you test out different energy gels or performance enhancers. 

If you don’t have a wellness category in your budget, be sure to add it to account for your new goal. If you do already have a wellness category, you may need to increase the amount you’re saving each month. 

Saving small amounts of money over a period of time is called a sinking fund.

Adjust as Needed

As we start saving for new items (or take on a new expense) it’s important to look at our budget as a whole to see if your income allows for this change. If you have extra money in your paycheck it’s easy to allocate these funds to go towards your goal. If you don’t have extra money you might need to adjust your budget by reducing spending in other areas.

You never want to be spending more than you bring in each month, that is how we accrue debt. Be sure to follow a zero-based budget to ensure every dollar is accounted for while avoiding excessive spending.

Start Saving Early

The best time to start saving for something is today! A clear example that I think a lot of us can relate to is saving for Christmas. If you start saving in January you’ll have a full year to reach your target versus sacrificing your entire paycheck in November and December.

Outlining your goals early will allow you to save with less stress as it will require less of your paycheck each month. 

Automate

There are plenty of tools to help you automatically save and transfer money. I personally love YNAB (You Need A Budget) to keep track of my monthly savings goals. Otherwise setting up an automatic transfer at your bank into a savings account will help you stick to your goals. 

Pro tip, be sure to have a tracker to know how much of your savings account balance is earmarked for each goal. As a transfer happens, increase the amount funded for each goal in your tracker. 

A Real Example

Here’s an actual screenshot of a portion of my budget within YNAB. Below are goals that we have committed to saving for at the beginning of the year, each with a financial target and date we need the money by. By using sinking funds we are able to take off some of the stress of life being so darn expensive while also ensuring we reach our goals. 

There are plenty of other sinking funds in other parts of our budget that include paying for my MBA in cash, completing house projects or saving for pet expenses. The number of categories you have will depend on how specific you want to be.