Make Your Plan, Then Work Your Plan
Budgeting for yourself, for a couple, or for a larger family, is actually a form of financial management. You are your own CFO (Chief Financial Officer). One of the basic guideposts of good management is: Make Your Plan, Then Work Your Plan.
Your plan has to be flexible enough to cover short-term, medium-term and long-term goals. In fact, when you start to consider that you really have to have long-term goals, you start to see the importance of saving money in the short term. The funds for that extra indulgence or impulse buy may not strain your day-to-day expenditures, but what if you SAVE that money and stash it in the interest-bearing saving program you are building for your long-term goal?
Most people just don’t have that mindset. They lose sight of the fact that money placed in an interest bearing account is actually working for them; increasing in value every year. It’s a lot easier to save when you think to yourself – this extra few bucks that I’m not spending now could go into my fund for a down payment on a new house. (Watch a short video on the Power of Compound Interest)
But there is one important step you have to take. Don’t just keep the money in your wallet and hope that is gets into a savings account. The minute you deny yourself an impulse purchase, take that cash and physically put in an envelope. Then, toward the end of the month, put the contents of that envelope in your long-term savings account.
Have you written down your long term goals? Have you written down the major steps you will have to take to get there? Have you put down a dollar amount you would have to have in order to achieve each step?
If you don’t already have one, open a savings account for long-term goals. It’s best to keep those funds separate from your current checking and/or savings accounts, so you won’t be tempted to draw on it unless absolutely necessary.
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