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Short Term Goals and Long Term Goals Other infos

There are two basic types of goals: short term and long-term. You need both working
together to reach your ultimate goal. Your day-to-day, week-to-week, month-to-
month goals all have to be in line with your ultimate goal so you can achieve it in the
time you set out.

A short term goal is a goal you can achieve in 12 months or less. Examples include:

▪ Take a class
▪ Buy a new television
▪ Write my resume

A long-term goal is something you want to do further in the future. Long-term goals
require time and planning. They are not something you can do this week or even this
year. Long-term goals usually take 12 months or more to achieve.

Here are examples of goals that can take several years to achieve:

▪ Graduate from college

▪ Save for retirement
▪ Have my own business

💡 Tips for Setting Long-Term Goals

▪ Work backwards. Think about what you want to achieve then plan
steps going back to what you can do right now.
▪ Create a picture of where you want to be in life 10 years from now.
▪ Think about what you need to do in five years, in one year, and in
six months to get to your long-term goal.
▪ Write down what you need to do each month to achieve your
goals.
▪ After each monthly goal is achieved, look at your goals and adjust
them as needed.

💡 Prioritizing Your Goals

How do you decide what to do first? How do you adjust your goals? This is called
prioritizing.
Prioritizing means that you decide what is most important to you right now. All of your
goals are important, but it's impossible to work on all of them at once.

▪ Choose what is most important right now.

▪ Focus mainly on that goal.
▪ Add additional goals as you become comfortable with your
efforts.
▪ Being flexible is important. Change your focus on goals as your life
changes.

Financial Freedom

Financial freedom has to be personal. Dream big and get specific about your goal.

What does financial freedom look like for you? Maybe it looks something like this:

▪ Freedom to choose a career you love without worrying about

money
▪ Freedom to take an international trip every year without it straining
your budget
▪ Freedom to pay cash for a new ski boat
▪ Freedom to respond to the needs of others with outrageous
generosity
▪ Freedom to retire a whole decade early

✔️Learn How to Manage Money

You won’t get ahead if you don’t have a plan for your money. Instead, you’ll find
yourself wondering where your money went at the end of every month! That’s not
financial independence—that’s a recipe for financial disaster.

Building wealth is impossible if you’re living paycheck to paycheck. Give every dollar a
name before the month begins and track your spending throughout the month. If you
consistently overspend or underspend in certain areas, you can always adjust the
amount in each category.

Budgeting is important to get your finances on the right track, but it doesn’t end there.
Even once you achieve financial freedom, you’ll still complete a unique budget every
month. No matter how much money you have, you need a plan. You won’t get to
financial freedom on accident. Budgeting is the first step to building
wealth on purpose.

✔️Clean Up Your Finances

Once you start learning how to manage money, you may realize you’ve made
some mistakes with your finances in the past. But if you want to experience
financial freedom, you have to clean up the mess before you can start building
wealth. Throw all of that extra cash at your smallest debt until it’s gone. Paying off
debt is hard work, but there’s nothing like the feeling of actually keeping the money
you bring in every month!

Once you’re debt-free, stay there. For good. Having debt undermines your ability to
build wealth and puts your financial plan at risk. It’s simple. Steer clear of debt!

✔️Be Smart About Your Career Choice

Your biggest wealth-building tool is your income. So when it comes to choosing a

career, there are a lot of things at stake. There’s no reason to stay stuck at a dead-end
job, especially if it’s making you miserable. Finding a job you enjoy that also supports
your goals of financial security will help you enjoy the journey.

✔️Learn About Your Investment Options

There are several investment options available in the market. The good news is the
sooner you start investing, the more time your money has to grow. That’s the power of
compound interest at work.

✔️Be Active in Your Journey to Financial Freedom

Making the right investment decisions is the first step, but staying in tune with your
fund performance is crucial to getting the most out of your investments. Financial
freedom is about more than just being able to cover unexpected emergencies—like a
car repair—without breaking a sweat. The fun really starts when you realize you can
meet the needs of others.

5 Ways to get Financial Freedom

Financial freedom means that you get to make life decisions without being overly
stressed about the financial impact because you are prepared. You control your
finances instead of being controlled by them.

The path to financial freedom isn’t a get-rich-quick strategy. And financial freedom
doesn’t mean that you’re “free” of the responsibility of handling your money well. Quite
the opposite. Having complete control over your finances is the fruit of hard work,
sacrifice and time. And all of that effort is worth it!

1. Inherit It

Lucky are those who have inherited a fortune that will pave the way to financial
freedom but a sum that can last one person a lifetime might last another just a few
years, months or even weeks. If you’re lucky enough to inherit a large amount of money
when you're young, think before you spend, Instead of rushing out to the mall or the
car dealer, young heirs should spend some time evaluating their financial situation.
Making this effort will give you a good view of your overall financial condition,
including income, expenses, assets, debts, and liabilities.

2. Marry It

Gold-diggers as they call it but there are really people who chooses to enter in a
relationship with someone who is rich in order to get money or expensive things from
them. This may be their game plan to get the financial freedom they think they
deserve.

3. Win It

There are also people who are extremely lucky to have won a huge sum of money from
a lottery, from gambling in a casino or even in small betting games. As some "unlucky
betters" would say, "there is a bigger possibility to got hit by a lightning than to win a
lottery". It sounds funny but it is true, not everyone can get our of financial chaos
through winning.

4. Steal It
Some people may think that the financial challenges the are facing are impossible to
solve and sadly chose this path in getting out of financial handcuffs. While it may solve
some of the problems but it will definitely create a bigger ones.

5. Make It
Making your way to financial freedom on your own may be the most fulfilling
achievement yet. When you have financial freedom you will never have to say "How
am I going to pay for that?". Instead of worrying, you pay the bill without thinking twice.
A week later you’ve forgotten that it even happened! That’s how little it affects your
financial situation. It’s not an emergency. It’s barely a hiccup! The next time a
pandemic or recession hits and you miss a monthly paycheck, instead of panic and
relying on the government, you’ve got a safety net. You can focus on the other
inconveniences of the crisis, not where your family’s next meal is going to come from.

Meaning and Definition of Budget

A budget is a carefully thought out plan of spending the money available for the
required period of time. Apart from spending the available money for meeting our
wants saving a part of the money is also important since saving of a part of the money
is useful for meeting future requirements. Hence personal budget means a plan of
using available money wisely for necessary expenditure and also a plan for saving a
part of the money for the future needs.

This naturally involves estimating of what the income will be during a period and how
much is to be spent on different items of expenditure and what part of the income is
to be saved. Hence budget is briefly described as a financial plan for future
expenditure.

Definition of budget:
The main purpose of budgeting is to help an individual to derive maximum benefit
from the personal income for that period. A budget is a plan for spending and saving
within a given income for a definite period say a week, a month or a year.

Characteristics of a Good Budget

Realistic Budgets:

The financial plans or budget are usually related to a particular standard of living. But
a realistic budget is the one which reduces the probability of over side of potential
expenses, recognize expenditure with plans for spending and compare the proportion
of expenditure with priorities in goal attainment.

Every financial plan is personal and there is no right or wrong plan. But a realistic
budget should include.
 1. Long range goal and possible emergencies.
2. Repayment of due bills, debts and notes.
3. Commitments both regular (as mortgage payment) and irregular (such as
taxes)
4. Miscellaneous, over looked items, unexpected expenses and extra spending.
5. Current living expenses such as food, clothing, allowance and transportation.
6. Satisfaction of near future goals.

The budget should be flexible and workable.

Flexibility:

If the budget is inflexible, it will not be functional. A flexible budget lists the normal
fluctuating expenditures by heading such as clothing, gifts, etc,. Assign an estimated
percentage of incomes for each category.

A flexible budget will also allow for impulsive buying within a prescribed limit most
people enjoy emotional spending and these are planned in attainment. Flexibility in
budget is increased when a range of expenditure is estimated for certain items that
normally have fluctuating pattern.

Workability:

For a budget to be workable, it must include same practical methods to achieve the
goals that have been identified for its time period.
A workable budget is complete, when it does not omit items that are normal for
spending pattern of the group. Incidents such as stationeries, postage, cosmetics, car
repairs, recreations, gifts are some of items forgotten some times. If such items are
considered as miscellaneous expenditure in budget, this category must be adequate
enough to include them.

Gaining maximum satisfaction from the budget requires accurate estimates of the
cost of living. If the income pattern is irregular and income is lower than the
anticipated amounts the flexible side of the budget must be trimmed or saving is
helpful to establish accurate estimates of flexible expenditures.

Factors Affecting the Budget

Some people make the decision to prepare a personal budget to meet a very specific
goal while others choose to create one in response to a new job situation. Whatever
your reason, it's a smart financial move. When you finally start creating your personal
budget, focus on a few important factors to ensure that it's complete.

✔️Income

The first important factor in preparing a budget is your income. When preparing a
budget you need to focus on your net income, not gross. The amount of money you
take home each month is what you use to pay your obligations. You could still choose
to list amounts that get deducted from your income on a pretax basis, such as
retirement contributions, in a separate area of your budget worksheet.

✔️Costs

Think of your personal finances as a business, and with any business you have costs
required to stay in operation. When preparing your budget you must take every
expense into account. Anything that you spend over the course of the month must get
recorded in your budget, and that can prove difficult in some cases. You must include
even the small purchases you make at the neighborhood convenience store to get an
accurate total for your budget.

✔️Balance

The next important factor in preparing a budget is achieving balance. The side of your
budget worksheet that lists income must equal the side for expenses. More income
than expenses is a nice problem to have — just assign the excess to a savings account
or other initiative. If after you record your budget details you have more expenses than
income, that's a more serious problem that requires you to reduce expenses and
possibly identify new ways of making money.

✔️Goals

Another key component you need to address when preparing a budget is how to
reach certain financial goals. Take time to mull over the short- (less than a year) and
long-term (one or more years into the future) goals you want to achieve with your
money. Record this information in your budget worksheet and monitor your progress
toward those goals regularly.

Tips in Making a Budget

A budget is going to give you an action plan and clear picture of where your money is
ending up each month. Budgeting will help you achieve the goals you’re working
toward—whether that’s getting out of debt, saving for retirement, or just trying to keep
your grocery bill from getting out of hand.

When you see planning a budget as simply spending your money intentionally, you
can actually find more freedom to spend! Once something has been budgeted for,
you’ll be able to spend that money without feeling guilty. Many people even say they
find "extra" money after they create a realistic budget and stick with it. How amazing
is that?

1. Budget to zero before the month begins.

Before the month even starts, you’re making a plan and giving every dollar a name.
It’s called a zero-based budget. Now that doesn’t mean you have zero dollars in your
bank account. It just means your income minus all your expenses (outgo) equals zero.

2. Every month is different.

Be sure to adjust your budget each month as things change. Make a savings fund you
can stash cash in throughout the year. When you don’t have a plan, you’re going to be
stressed. And that takes all the fun out of giving and celebrating.

3. Start with the most important categories first.

Giving and saving are at the top of the list, and then comes the Four Walls—food,
shelter and utilities, basic clothing and transportation. Once your true necessities are
taken care of, you can fill in the rest of the categories in your budget.

4. Pay off your debt.

If you have debt, paying it off needs to be a top priority. Get rid of debt as fast as you
can. Attack it! Get mad at it! Stop letting debt rob you of the very thing that helps you
win with money—your income.

5. Don’t be afraid to trim the budget.

If things are tight right now, you can save money quickly by canceling your cable,
dining out less, and shopping at discount clothing and grocery stores. Remember, your
budget cuts are only temporary. You can always make adjustments later down the
road.

6. Make a schedule (and stick to it).

While you’re making a budget part of your monthly routine, pick specific dates for
other expenses. When you know what to expect and when to expect it, you take a lot
of stress and potential pitfalls out of the picture.

7. Track your progress.

It’s important to check your progress from time to time. Look back at your earlier
budgets to see how far you’ve come. And don’t forget to celebrate the small wins. If
pen and paper (or spreadsheets) aren’t your thing, it’s time to join the 21st century and
use a budgeting tool. You can focus on planning a budget and tracking your spending
from the comfort of your smartphone!

8. Create a buffer in your budget.

Put a small amount of money aside for unexpected expenses throughout the month.
Label this as your miscellaneous category in your budget. That way when something
comes up, you can cover it without taking away money you’ve already put somewhere
else. Keep track of expenses that frequently end up in this category. Eventually, you
might even want to promote them to a permanent spot on the budget roster.

9. Cut up your credit cards.

If you’re really committed to sticking to a budget and getting out of debt, you need to
ditch those credit cards for good. Having no credit card debt will mean no more
minimum payments to add to the budget, zero hassle with fees or high interest rates,
and much less stress and worry!

10. Use cash for certain budget categories that trip you up.

If you’re constantly overspending on your grocery budget or fun money, cash out
those categories and use the envelope system to hold you accountable. Just go to the
bank and pull out the cash amount you’ve budgeted for that category. Once the cash
runs out, stop spending!

Steps in making a Budget

The following steps are involved in developing a budget plan.

1. Estimation of Income: The total income must be estimated before developing a

budget. The total income includes income from sources like salaries, wages,
interest, rent, dividend etc.
2. Listing out items for buying needed and also list out the services needed
throughout the budget period.
3. Finding out the prices of the concerned items from shops, friend etc/estimate
the cost of desired items, total each classification and strike the total for the
budget, past records are helpful in this connection (Bills, Receipts etc).
4. Listing of items of fixed costs like rent or taxes etc.
5. Priority list of items and anticipated items to be prepared.
6. Keeping aside a definite amount for saving to meet emergency expenditure or
for future benefit.
7. Bring expected income and expenditure in balance.

Start Budgeting

A budget is a plan for how you’re going to spend your money. It puts you in charge
and in control of every peso that you earn or spend. It is like telling every peso where it
should go—before the month begins—using a zero-based budget. This means that
your income minus your expenses equals zero.

Remember that feeling you had when you found ₱200 in your old coat pocket? That’s
the same feeling you’ll have when you create (and stick to) a budget. You’ll find money
you didn’t even know you had—and build wealth doing it!

A budget doesn’t limit your freedom, it gives you freedom!

Step 1: Write down your total income.

This is your total take-home pay (after tax). Don’t forget to include everything—full-
time jobs, second jobs, freelance pay and any other ongoing source of income.

Step 2: List your expenses.

Think about your regular bills (rent, electricity, etc.) and your irregular bills (quarterly
payments like insurance) that are due for the upcoming month. After that, add up your
other costs, like groceries, gas, subscriptions, entertainment and clothing. Every peso
you spend should be accounted for.
Step 3: Subtract expenses from income to equal zero.

We call this a zero-based budget, meaning your income minus your expenses should
equal zero. When you do that, you know every dollar you make has a place in your
budget. If you’re over or under, check your math or simply return to the previous step
and try again.

Step 4: Track your spending.

Once you create your budget, track your spending. It’s the only way you’ll know if your
spending lines up with your plan. You may use manual jotting of transaction, using of
excel spreadsheet or downloading a money tracking application on your digital
devices.

Expense Tracking

Who doesn’t have a goal for the new year that involves money? Many of us have goals
that involve making more money or managing the money we already have — but, no
matter exactly what goal you might have for your money, you’ll probably need some
baseline information about it. While understanding your expenses is basic, they make
up some of the most important information you can gather about where your money
goes. Tracking expenses can be a relatively simple matter and can provide you so
much information about your spending habits.

Tracking your expenses is one of the key factors in making your budget work for you. If
you do not know how much you have spent each month, you cannot tell when you
have overspent. Even the small expenses can cause you to blow your budget. There
are several options available to you track your expenses.

How to Track Your Expenses

1. Create a Ledger

First, you will need to have your budget with you. You should also have a notebook
available to you. You can divide your paper into about three columns a piece. You will
need to write down each budget category at the top of the column. Then you need to
record the assigned amount next to it. If you have not created a budget, and are
tracking your expenses so that you can create one, then you should decide on basic
spending categories such as utilities, food, rent, eating out, fun money, and insurance.
Record each of these at the top of the paper.
2. Record Your Expenses Throughout the Day

Next, you will need to take time each day to record your expenses. As you record each
expense in a category, you will need to keep a running total of how much you have left
in that category. Simply subtract the amount you spent from the current total and
record the answer. It may be helpful to have two separate columns, one for expenses
and one for the current total. You may also want to record the total in another color. If
you are tracking expenses to determine how much you spend you will need to add the
amount you spent to your running total. If you are married, it helps to sit down and
review how much was spent each day. It is especially important if you are just starting
to budget. It can help you encourage each other as you change your spending habits.

3. Stick to Your Spending Limits

You will need to stop spending when you see that you are out of money. It is the
essential step in staying on budget. You may find that your budget is unrealistic or you
may need to transfer money between categories. Take the time towards the end of
the month to adjust next month's budget so that will work for you. It is important to
remember that saving and debt payments should take precedence over eating out
and vacations. You will need to cut back in some areas, but you should still be able to
eat every day.

4. Choose What to Do With the Money You Did Not Use

At the end of the month, you have the option of rolling the money over into the next
month's category or transferring the money to a savings account. For bills that vary
like your power bill, you may want to roll the balance forward to help even out the cost
of the utilities each month. For things like groceries, you may want to transfer it to
savings so that you can build up your emergency fund or work toward other goals.

💡 Points to Consider

✔️Use budgeting software or a budgeting system to track your expenses. It can save
you time, and it makes it easier to manage your budget each month. There are a wide
variety of options you can use to manage your finances, and it is important to find the
right budgeting software for you. Ideally, you want to find something that will work
across platforms and sync with your bank. If you are married, you want something that
allows both of you to enter expenses on the go to make tracking your spending much
easier.
✔️Switch to cash only for categories where you do a lot of spending each month. For
example, groceries, eating out, and entertainment categories. You will set up an
envelope for each category and put the amount you budgeted in it at the beginning
of the month. When you go shopping for those categories, you will take the envelope
with you. You can keep the receipts in the envelope so you can check at the end of the
month to see how much you spent.

Money Tracking

Tracking your expenses is one of the key factors in making your budget work for you. If
you do not know how much you have spent each month, you cannot tell when you
have overspent. Even the small expenses can cause you to blow your budget. There
are several options available to you track your expenses. One of the simplest is a
written ledger or tracking system. It may be even easier to choose budgeting software
that works with an app to track expenses on your phone. It will allow you to keep up
while on the go.

Financial transactions often include income (salary, gifts, interest,

etc.), expense (food, apparel, gifts, health, leisure, etc.) and transfers from one
account to another (bank-to-bank fund transfers, withdrawal of cash from bank
account, deposit of cash, collection of receivables, etc.)

Over the holidays, assess yourself which expense tracking options suits best for you. It
may be manual jotting, using excel spreadsheet or via an expense tracking system.

Submit a picture of your summer earning and spending transactions using the
method you chose and discuss why that method is best for you.

Remember to continue tracking your financial transactions as it is a weekly deliverable

starting this week (June 27-July 1) until July 18-23.