An important step that people often miss in the budgeting process is goal setting. Setting goals allows you to work out where you want to get to and what you want to achieve while a budget helps you work out how to get there.
When setting goals make sure your goals are SMART goals. That is that they are:
S = Specific
M = Measureable
A = Achievable
R = Realistic
T = Timely
For example: ‘I want to save $1000 in the next 12 months for a family holiday’ would be a SMART goal. If your goals are vague eg ‘I want to save some money’ you are much less likely to stick to them and have no way of knowing when you have actually achieved them.
To ensure you stick to your goals why not share them with your friends or family (to make you more accountable) or stick them on your fridge so you see them every day.
If you are a New Zealand Home Loans client you can create and record your goals (or milestones) in the tracking section of www.mydebtnav.co.nz or the Sorted website has some great information on goal setting and even has some worksheets to help you record your goals https://www.sorted.org.nz/a-z-guides/setting-goals
Once you know what you want to achieve a budget allows you to create a plan to achieve those goals.
It is important that your budget is as accurate as it can be, otherwise it won't work so before you sit down to do it make sure you have all the details about your income and expenses such as:
• Bank statements
• Pay slips
• Copies of recent bills (eg rates, electricity, phone, insurance etc)
• Remember to also account for annual or ad hoc expenses such as car registration, doctors/dentists costs, christmas expenses etc
If you are a New Zealand Home Loans client you can create and review your budget in the tracking section of www.mydebtnav.co.nz or the Sorted website has some good budgeting advice and tools to help you create a budget https://www.sorted.org.nz/a-z-guides/budgeting