Module six establish your goals. It is important that you have a goal or goals in mind when you start a budget. Your goal can be simply to not have any of your utilities turned off due to non payment, your goals could be more complex. An example of a more complex goal would be to pay your utilities on time so that your credit score improves enough for you to get a loan on a car. Be they big or small, many are a few goals are important. Short term versus long term.

There are two different types of goals that you can set when forming your budget. There are short term goals and long term goals. short term goals are goals that can be achieved fairly quickly. long term goals are goals that can be achieved over a long period of time. Some of your short term goals could be steps to achieving your long term goal. Here is an example.

Long term goal buy a car short term goals. pay bills on time so that credit stays good. Spend less money on fast food by looking more at home, rent movies instead of going to the movies, start saving extra money for a down payment. Be realistic. Another important factor when creating a budget is to be realistic. Making a budget means taking a real look at your spending.

You can use your budget to cut some of the frivolous purchases that you might be making in haste. But you want to make sure you are making smart cuts that you are going to stick to. We talked earlier about that New Year's resolution to work out every day. A more realistic goal would be that you work out once or twice a week. You can always increase your workout routine but you want to make it a realistic goal that you can achieve. Don't make your budget a new year's resolution make it a good habit.

Give yourself wiggle room and money to splurge occasionally, otherwise, you will stop using what might be the best tool in your belt. actually get rid of debt. If you are over the age of 20 you probably have achieved some level of debt. It is very useful. Tell them that someone doesn't have any debt anywhere. A budget can help you start paying off some of the debt that you have accumulated throughout your life.

Paying off your debt can not only improve your credit score but also your quality of life by reducing stress in your life. Here are a few types of debt, credit cards, bank overdraft fees, past due medical bills, payday loans, student loans, gambling, mortgage car loans, say for the future, everyone needs a little nest egg. Having an emergency fund is one of the benefits of having a budget. You can save small amounts of money each week, two weeks or a month for emergencies. You never know when you might have to have repairs made to your car, you lose your job or a pipe in your house ruptures. It's comforting to be able to face the disasters head on knowing that you have the ability to take care of it yourself thanks to your savings.

Another important type of save his retirement savings, people are living longer and longer these days, which is great. This newly found longevity though does create a financial problem though. When the Social Security Administration was started in 1935, the average life expectancy was 61 years old. Now the average life expectancy is 81 years old. According to the Social Security Administration, the trust to fund reserves are estimated to be depleted by the year 2037. So as we get older, we are no longer able to depend on the Social Security payments to be enough to cover our living expenses.

We have to take the opportunity now to save for a future or risk being financially destitute. Case Study, Michael has decided he is going to make a budget to help him save up for a house. He knows that he needs to get his credit score up and start making some good credit choices. He talks to his brother Tim who reminds him also of the importance of having a mistake also to fall back on Michael decides to start making a list of the short term goals that he needs to achieve in order to reach his long term goal of being a homeowner. First, he gets his credit report and starts paying off the debt that he has. He also starts making a habit of throwing all of his coin change in a jar.

Each time the jar is filled, he caches it and puts it in a savings account. He also starts putting $30 out of each check to add to his savings. After a year of hard work and being faithful to his budget, he is able to put a down payment on a house of his own