Budgeting with Future Goals in Mind

A good budget isn't just a tool to give you a good snapshot of where your money is going each month, it can also help you to fund future goals. For instance, say you want to plan for future expenses for a vacation. A budget can help you set aside the money you need in small amounts so that by the time the vacation time rolls around, you have the money sitting in your account. Future goals can also include retirement goals, funding school expenses, and even weddings.


Long-Term Goal Planning
Whether you are trying to retire in 40 years or 10, you can start to budget your savings so that by the time you retire you have what you need to have the standard of living your require. In fact, for long-term goals, the farther away a goal, the easier it is to budget an amount to meet the goal because you are saving smaller amounts over a longer period of time.

When Life Happens
A carefully crafted budget can also point to problem areas when life happens and you end up spending more than you had budgeted. It can help you quickly devise a plan to get back on track by putting additional savings aside until you can go back to the original amount.

Value of Time
If you invest your savings into a plan to help fund the goals, you can also use the compound value of time and interest to build your nest egg. That's what 401Ks and 529 plans are all about. If you budget a set amount of money to fund these plans as you are in your prime earning years, it's possible to have much more money in the account when you retire if the market performs well. The older you get, though, the more you may want to move these assets into accounts that don't have much market risk.