It’s okay to admit it… managing your household finances is hard. It requires careful calculation month in, month out. It means you have to hold yourself accountable for every purchase you make; large and small, essential and frivolous. It means that you have to draw up a budget template and have the discipline to stick to it. It means that you have to trawl the internet looking for the best savings accounts that will produce a high yield with no risk. You have to silence that little voice in your head that goads you into making impulse purchases which you know will bring you no joy in the long term but at the time seem like the best idea ever.
All this discipline, abstinence and generally being sensible can make us stop and think “What’s the point of all this!”. And that can be hard to answer. “To save money” or “To save for a rainy day” are likely the stock answers we give ourselves, but if these are our only motivations it can be hard to persuade ourselves to stick to the straight and narrow. In order to effectively take control of your household finances you need clearly defined and specific goals.
Think about it… What are your goals?
What are your goals? It’s probably harder to answer than you may assume. However, setting goals is an essential tool in providing the proper motivation to save and plan your finances responsibly. Take your time to come up with some goals. They can be big or small, and by no means should you restrict yourself to just one. It could be saving for a new 4K TV or for an overseas investment property like a luxury condo for sale in Singapore. Whatever they are, make sure that your goals are personal and meaningful for you and your family. Don’t fall into the trap of chasing status symbols or things that you feel that you should want.
In a sense what your goals are is not as important so much as having them. Here’s why…
Knowing your goals keeps you motivated
Temptation is all around us. It’s in every Black Friday sale. It rears its head every evening where you’re too stressed to cook and the allure of a take out pizza is hard to refuse. It’s so ubiquitous that it can make retaining the motivation to save for your future incredibly challenging. When you have a goal that’s meaningful to you, however, it’s far easier to eschew these everyday temptations and keep your finances on target.
It helps you to save specific amounts
Many struggle with exactly how much they should be setting aside every month. Thus, the amounts paid into their savings can fluctuate wildly and in some months there may not even be any savings made at all. Having specific goals makes it easy to calculate how much you need to save and how much you need to squirrel away every month to save within the allotted time frame. When you know exactly how much you need to set aside every month, it’s much easier to stash away that amount every month and treat it as a fixed outgoing rather than an optional extra. And hey, if unexpected circumstances and expenses occur forcing you to miss a month, that’s okay. Just divide what you would have paid in by 3 and pay that much extra in over the next 3 months.
It forces you to budget
Budgeting can be extremely hard, and while we may find it rewarding and exciting when we see it start to pay off, rarely is it ever fun. When we don’t have clear and specific goals in mind, it can cause us to treat budgeting as an optional extra. Something that we know that we should do but rarely ever get around to, instead telling ourselves we’ll deal with it next month.
When you have set goals, however, it forces you to budget to accommodate your fixed payments into your savings account.
Things will happen to knock you off track… But goal setting will help you get back on it
We’ve talked before about how goal setting can be made more difficult when life gets in the way. This is as true for financial planning as it is healthy eating. Every now and then you’ll have an unexpected expense (or a birthday party where there’s cake). In money managing, as in healthy dieting, you can’t let one bad day or one bad month knock you off track.
When you have specific goals in mind, it’s far easier to pick yourself up again and right the ship in pursuit of those goals rather than simply abandoning hope.