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In week 2, we urged you to turn your resolutions which are usually general in nature into SMART goals by making them Specific, Measureable, Attainable, Realistic, and Time-bound.
Now that you better understand your current financial condition, have defined your goals and developed your plan to reach those goals, it is important that you budget and begin to attach a name to every dollar you spend. When you budget, you tell your money where you want it to go. You get intentional about how you spend your money and in turn, are in better control of your money.
Think of your budget as a physical indicator of what you want to do with your money. You may choose to use pen and paper, an Excel spreadsheet or even a mobile app to record your budget. Be sure to find the tool that works best for you.
Your budget should be realistic and accurate but purposeful and intentional. You need to record how much will be going towards each of your fixed monthly expenses (e.g. mortgage, car payment) and set limits on how much you will spend on variable expenses such as entertainment and food. (You will want to use the information you gathered during week 1 of the 12 Week Check-Up to assist.) You should also use your budget to record how you will accomplish the SMART financial goals you set. Your budget is the tool that will help you Measure the progress.
When creating your household budget, you need to make sure that everyone is on board. If you are in a relationship, you and your significant other should create and agree on the budget together. And if you have children, you should talk to them about the household budget so they better understand the family’s financial position. The whole family must work together in order to successfully stick to your budget.
Your Prescription for Week 3
Next week we focus on your spending habits.
