Final step: Planning the future.
We have entered the last chapter. This is where you look beyond and see what you want in the future. We are talking about big goals, small goals, or maybe some big expenses that we know are coming in a few months.
Now let's plan out what are our future expenses and life goals. Some of these things might be similar to yours:
- Car Insurance Renewal
- Vacation Plan
- Buying a home
The power of budgeting is that you can start small as you go along, and to tackle the bigl goals, you can start saving from now and the compound effect it has later on will make it painless. Imagine if you have to shell out thousands of dollars for Vacation Plan in without saving it up for at least a few months, it will be a nightmare!
This is where budgeting for life goals comes in. To start off, simply create a category as you normally would. Now, every time you receive your paycheck, try to set aside a few amounts and put them in these categories. For those categories which you know when they are coming, such as car insurance, put in some amount that you would add up accordingly once the time comes, but for other goals, you might not need to put the same amount every time.
The power of this is that instead of thinking each of them as one big purchase, you are now able to slowly save and fully aware that they are coming. When the time comes, you can make the big purchase, painless, as if it's nothing.
Now, try to list down what you want to achieve in the future, and start budgeting them from today.
You're all set!
Congratulations, we have gone through all the basic steps of budgeting, now you should slowly be able to prioritise your expenses, keep track of your spending, adapt to an unexpected financial situation, as well as plan for the future.
Remember, EP doesn't stop just here, check out our resource page to see how to track reimbursement, schedule your bill payments, search and generate reports, seeing your budget in multi-month view, changing your category overspent-behavior, and much more!