Budgeting to help fund your financial goals

Part of our build your own financial plan series

Woman who is creating a budget to determine how to fund her financial goals.

Last month, you tackled goal-setting and completed a financial goals worksheet (PDF). You identified and prioritized:

  • Short-term goals—6 months to 5 years
  • Mid-term goals—5 to 10 years
  • Long-term goals—more than 10 years

And you noted current savings you have toward each. So if you’re short of money you need toward a goal, how do you fund it?

You free up money by taking a closer look at … yes, the dreaded “B” word. (Budget.) Where can you cut back? What are your priorities? Because when you can “find” extra money to save and invest—and potentially grow—goals can become more attainable.

Why you need a budget, even if you don’t want one

Some people resist doing a budget because they think it’s going to restrict them from spending the way they want. Or they don’t want to face the reality of overspending.

Don’t go there. Just think of it as your monthly cash flow and a saving/investing plan. Give yourself permission to decide where and how you spend your money.

Before you can start, you need to know what’s coming in and where it’s going. Then, pay yourself first. Or think of it as paying your “goals” first … meaning, save and invest toward the goals you set. The rest of the money is yours to decide how to spend.

So, let’s get started.

  • Use our downloadable budgeting to fund your goals worksheet (PDF) and jot down your numbers. Look at recent bills plus bank and credit card statements to give you the facts. (Be realistic. No cheating.)
  • Adjust. Prioritize. Revise, as needed. (Fixed = bills you’re committed to paying. Discretionary = you have some control over what/how much you spend.)
  • Make note of your monthly take-home pay. Subtract your new/revised budget. See what’s left that you could put toward your goals.
  • For each of your goals, check whether it’s fulfilled or needs more funding, and if it’s a “critical” goal.
  • Decide how much of the extra money you’ve found could be put toward your critical short-, mid- and long-term goals. Log it on the worksheet. Once you’ve made good progress toward the critical goals, start tackling the rest of ‘em.

Budget still coming up short?

Don’t panic. We’ll continue to look for ways to help you adjust your spending and saving throughout the year. For example, next month’s story in this series will focus on tax planning.

In the meantime, here are a few stories that may inspire you to think about your budget in new ways:

More income … can mean faster progress

Of course, more income helps, too. Lots of people have a side hustle for extra money. Maybe you can teach a community education class about container gardening, make funky furniture for local art fairs, or rent the guest room in your home as an Airbnb host. Search online for "side hustle ideas" to get started.

Is now the time to ask for a raise at work that you feel you deserve?

If you’re considering a job or career change, will you have a higher salary? That could help you meet your financial goals faster. Well, as long as you don’t change your standard of living and actually put the extra income toward the college fund for your kids, the beach vacation with your friends, or the credit card you’re paying off. (Whatever your goals are.)

Next steps

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements. 

Insurance products and plan administrative services provided through Principal Life Insurance Co. Securities offered through Principal Securities, Inc., 800-547-7754, member SIPC and/or independent broker-dealers. Principal Life, and Principal Securities are members of the Principal Financial Group®, Des Moines, Iowa 50392.