Your route to your goals .......continued

Achieve your goals with a budget – continued

 

As already stated, budgeting makes it easy to establish both short- and long-term goals and track your progress toward them. A good budget will help you do all of the following .......continued

 

5.    Start a Rainy Day Fund

To make sure that unforeseen expenses don't cause your goals to careen off track, build up some cash reserves. Three to six months' worth of expenses is a good cushion. This will help protect you from a sudden loss of income, an unexpected car repair bill or the like.

We all have those expenses that come for us unexpectedly. Maybe you develop a serious toothache and your dentist informs you that you'll need a root canal and a crown. While you may have dental cover through your medical aid, you're still going to have to fork over at least E500 unbudgeted for funds to get the work done. How can a budget help you handle an expense like this?

If you're new to budgeting and don't have any emergency savings yet, or if your savings have already been depleted by another recent emergency, your budget will help you determine what expenses you might be able to postpone or shift around to help you pay the unexpected bill.

For example, maybe like me, you pay your car insurance once a year and it's due next month, but you can opt to pay half now and half in six months instead to free up the cash to pay your dental bill. Or maybe your situation is tighter than that, but you can see that if you cut next month's grocery bill from E700 to E400 and go out to eat once instead of twice, you'll be able to start making a dent in your dental bill. Also, you may not have to pay the bill immediately. Payment of almost any emergency expense can be postponed by at least a couple of weeks by putting it on a credit card or asking the service provider to let you make two or three payments over several weeks or months. Of course, if you put the expense on your credit card, you should pay it in full when the bill is due if at all possible to avoid paying the exorbitant interest rates that a credit card attracts.

Your budget will also give you an idea of how long it will take you to replenish your depleted savings once you pay off your dental care.

6.    Get the Most Out of Your Money

Chances are you spend at least 40 hours working each week, and that doesn't include the time you spend getting ready, the time you're forced to be away from home because of commuting and lunch time, or the hours of free time that get lost because you're too tired from working all day to enjoy them. If you're going to dedicate that much of your life to earning a living, you owe it to yourself to make sure your money is going to the things that are most important to you.

A budget helps you track all your expenses - large and small. It lets you find out how much you spend on everything from coffee breaks to music downloads to fuel to clothes. If you discover that you're spending E1000 a month on clothes, charging these to the store cards knowing still that you cannot afford them, and that horrifies you because you haven't been able to afford a vacation in three years, you will know what to do. And because you know where your money is going and you'll continue to track it, you'll finally be able to save up for that vacation.

7.    Save for Fun Things, Too

If all your savings are going toward dreary activities like paying off debt and saving for unexpected car repairs and medical bills, your only incentive to save might be the fear of what will happen if you don't. Fear is a great motivator, but it is neither fun nor sustainable. Sooner rather than later you will get a brave spell and therein lies your doom, for you will start spending out of pocket (budget).

So even if you are indebted up to your eyeballs and are committed to getting out as quickly as possible, it is still very smart an initiative to plan some rewards into your program. You may think that a E1,000 vacation is setting you back, but consider what would happen if you didn't take that vacation. You might go on a spending binge one day to compensate for how deprived you've been feeling under an avalanche of bills, and not only might it cost more than the vacation would have, but you won't get the several days of relaxation that a vacation could have brought.

Yes we must budget for our vacations. And no, we do not have to wait until we have a lot of money to afford to take one – we make vacation time a priority, budget and save for it and allow ourselves to enjoy a moment in our life’s walk. That, I find becomes the one sure way to enhance the mind to stay focused enough o want to continue sticking to a budget.