By Ryan Laspina
Analyst, Red Flags and External Reviews
Whether you are a college student or in the workforce, budgeting is essential to maintain your financial strength. Budgeting can help everyone achieve their financial goals: people who live from paycheck to paycheck, people who have large bank accounts and anyone in between.
Creating a budget is time-consuming, so make sure you set aside an appropriate amount of time to get started.
When you sit down to create a budget, the first thing to do is set some financial goals for yourself. Create a set of short-term, medium-term and long-term goals.
Setting Short-Term Financial Goals
A short-term financial goal is a goal you can reach within a few weeks to a few years. Short-term goals include paying off small loans, purchasing school textbooks with cash (not credit), or lowering your cell phone and utilities bills.
Determining Your Medium-Term Financial Goals
A medium-term goal should be reached within three to five years at a slow and steady pace. Medium-term goals include paying for and completing college, saving money for a new car or building your savings account to a certain amount.
Planning Your Long-Term Financial Goals
Long-term goals are financial goals for the distant future and could even take most of your lifetime. Ideally, plan your long-term goals for at least three years into the future. Examples of long-term goals include saving for a down payment on your “forever” home, funding your retirement, or paying off all of your student loans and personal debts.
Creating a Budget Takes Work, But It’s Worth the Effort
This three-tiered approach of setting goals allows you to budget for your immediate future while also setting yourself up for financial success later in life. Reaching short-term goals will feel good and motivate you to keep pushing forward to eventually meet those medium-term and long-term goals.
Setting goals is an important aspect of accomplishing hard tasks. Budgeting will always be necessary (and tough). However, it can be made a lot easier by creating realistic, measurable goals and sticking to them.
Budgeting might seem like a chore, but putting in the necessary time and effort to set a budget will likely pay off as you go through life.
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