Budget Bootcamp Week Four: Setting Goals & Making Sacrifices

Before this series officially began, I asked a few questions to you all in our Facebook group. One of these questions included identifying your reasons for setting a budget. The purpose of this was to give us a goal to work toward and to keep us focused when sometimes sticking to the budget doesn't seem fun. Let's be real. Life throws curves. Things don't always go according to plan. Sometimes things we really want or need just aren't within reach as quickly as we would like them to be. These facts are exactly why sticking to your budget is important. Today, we're talking about keeping our eyes on the prize and making sacrifices.

Setting Goals
Those of you that know me personally know I love making lists and setting goals. This applies to lots of areas of my life, finances included. Statistics show that actually writing down your goals on paper increases your likelihood of success by 50%. Fifty percent! That's huge! Sharing said goals with someone close to you increases these odds even more. In order to achieve our goals, we need to not only know what they are, but how to get there. "I want to get out of debt" is a great goal, but without having a plan of action, it's probably going to feel like it'll never happen. So how do we expand on this goal? I like the acronym S.M.A.R.T. for goal setting. It stands for Specific, Measurable, Action Oriented, Realistic, and Timely. So let's put this into action for our goal of paying off debt.

• S - Pay off Credit Card Debt
• M - $8,000 debt to date
• A - Making extra payments each month
• R - $350 per month 
• T - Paid off in Two Years

So although this situation is entirely hypothetical, you can see that the underlined words are where we met the acronym requirements. We took the goal of getting out of debt and identified what debt, how we would do it, and how long it realistically will take. Setting goals that are realistic is so important. It's great to push ourselves and rise to a challenge, but saying you'll pay off $8,000 of debt in 3 months is probably very unlikely. Only you will be able to determine what is realistic and feasible for you and your goals.

One goal we should all be working towards is creating or building an emergency fund. Those curve balls I mentioned life throwing usually come with a price tag. Unexpected car repairs, medical expenses, home repairs, or loss of income are some things that could drastically impact your financial situation and leave you wondering how on earth you will pay for things. An emergency fund is for true, unexpected expenses. It should not be spent on vacations, elective remodels, paying routine bills, or other wants. These things should be saved for separately. Most checking and saving accounts are fee-free these days, so consider separating your money into different accounts for different purposes. We have our checking account that is used for month to month expenses, a checking account for my business expenses/income, a savings account labeled Emergency Fund, a savings account labeled Home Expenses (for our renovations), a general savings account (for travel plans and other miscellaneous things) in addition to our investment and retirement funds. Dave Ramsey is a great leader in the world of personal finance, and he recommends a minimum of 6-12 months of living expenses stashed away in your emergency fund. If you don't currently have any emergency savings set back, now is the time to start. Even if it's only $5 a week that you can contribute, it's a start. It's better to have it and not need it than need it and not have it. 

Making Sacrifices
Sometimes our goals can seem overwhelming and feel like we will never achieve them. I get that; I've been there. And what I've found to be the most effective way to take the reigns and make it happen boils down to one simple question. How bad do you want it? Like most things in life, achieving financial goals won't just happen by wishing for them. You have to be willing to make some short term sacrifices to get you where you want to be long term. Dave Ramsey's saying "live like no one now so you can live like no one later" couldn't be more true. What he means is that you might have to do things a little unconventionally now so that you can live the life of your dreams later. This is where we have to keep our eyes on the prize. What small sacrifices can you make in your life to get you to your goals? Some ideas include cutting cable, reducing the number of trips to Starbucks, cutting back on how much you dine out, brown bagging your lunch... these only scratch the surface. Take a look at your spending and find ways to cut back with your goals in mind. It may take a while to get used to, but in no time you'll be reaping rewards for your efforts.

So this week's "assignment" is to write down your goals and sacrifices. Use the smart acronym to help you create a realistic plan of attack. Hang this up somewhere you'll see it often. The fridge, your office, your bathroom mirror... somewhere you'll see it and stay motivated. Here is a peak at mine.