Whenever I advise someone on their budget, I always start by asking, “What do you think you should do first?” Whether I’m talking to a client, a friend, or a class, the answers are always the same: “Look at my bank accounts.” “Figure out how much I’m spending.” “Pay off my debt.” “Gather up all of my papers.” These are all great answers. It’s just that none of them are where I would start.

Like with most things, it’s so important with budgeting to start at the beginning. Having a solid foundation makes everything easier later. It’s also saves you a lot of effort when you don’t have to find your way to the beginning later in the process.

So what’s the beginning?

I like to start with goals. I think that goals are incredibly important. These aren’t only goals for budgeting, but for your life. Start with making a list of life goals. This list can be as general or as specific as you want. Pull out some paper or a notepad app and take 5 minutes right now to make a quick list. You can add to it later. Go ahead. I’ll wait.

Welcome back! Do you have your list? Good. Now, to give you a few more ideas, here are some of the answers my clients have given me: buy a car, go to more concerts, take piano lessons, buy a boat, start or increase an emergency fund, travel more, go back to school, have kids, start a business, pay off debt, save for retirement, live in another country, buy a house, have pets, be able to quit my job whenever I want, start a college fund for my kids, run a marathon, buy a new smartphone, retire young, take up new hobbies, not live paycheck-to paycheck. Add some of these to your list if you want, or use them to give you ideas of other goals you have.

Taking it a step further

The goals you wrote down are a great start, but we can do better. Try asking yourself: Why? Why are you working on your budget? Why are you reading this?

Take your answer, and then ask why that. Let’s say your answer is “to pay off debt.” That’s good. Now why do you want to pay off debt? Or let’s say your answer is “to travel more.” Ok, why do you want to travel more? Really get into the why of it all. This is your Ultimate Goal.

Everyone is different, so your why could be anything. My big whys are freedom from worrying about money, freedom to spend my time as I want (including more time with loved ones), and the ability to help others. My Ultimate Goal is “Freedom.”

Freedom is a common theme for a lot of us. We want to get rid of stress and worry. We want to have more fun. We want more control over how we spend our time.

Take some time to think about your deeper why. Put that at the top of your goals list. In capital letters. Underlined. And highlight it. Because it’s the most important part.

[Side note: If you have a significant other, I suggest you make your lists separately, then afterwards compare your lists and work on a combined list. This is a great exercise to make sure you’re on the same track.]

What to do with your goals

Obviously you can’t work on all of your goals at once. Pick 3-4 goals that you want to focus on right now. Trust your gut when you choose them. Remember, you can always change them later (and I’m sure you will, because everyone’s priorities change over time.)

These goals are now your financial focus.

Figure out how much money you need for each. How much will that new house cost? How about travel and registration to run in that marathon? Will it be a one time cost ($1000 for your emergency fund) or a recurring cost ($200 every month for piano lessons)? Make a note of that, too.

Now take your list of goals and costs, and write it down. Put your Ultimate Goals at the top, highlighted. And underlined. In capital letters. Put this list someplace where you’ll see it often. Have a copy on your fridge. Tape it to the bathroom mirror. Put another copy on your phone’s lock screen. Make sure you see it every day. Because this will be your inspiration.

When you’re not sure whether to spend money on something, look at your list and ask yourself if you’d rather put the money towards your goals. Sometimes you will and sometimes you won’t. The important part is that you’ll think about it.

When you get discouraged (and you will, because we all do from time to time,) look at your goals. Remember why you’re doing this and that it will be worth the effort!

Review this list at least once a year, because it’s going to change as your life changes. You’ll remove anything you’ve finished or that you just don’t have as a goal anymore and you’ll add new goals.

Why I start with goals

Dealing with money can be stressful. Changing money habits can be hard. Cutting expenses and finding new ways to earn more money isn’t easy. One day you’re going to ask yourself, Is it even worth it? Then you’ll look at your list of goals. And you’ll know that it is.

From time to time you’re probably going to ask yourself, Am I on track? That can mean a lot of things, but you’ll be able to look at your list of goals, and you’ll know if you’re completing them.

Basically, I think that the best way to stick with something is to know why you’re doing it and to really focus on that reason. Saying “I want more money” or “I want to pay off debt” is a great start, but it’s not enough. Having a list of 10 things you want to accomplish is a great way to be sure you won’t accomplish any of them because it’s too hard to focus on that many things at once.

Focusing on one Ultimate Goal and then just a few solid, defined goals (“pay off $30,000 of debt in 14 months” or “save $3000 for a trip to China by August) is a clear path to success. Why not give yourself the greatest chance at success that you can?

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