Budgets for pursuing your dreams

Few things feed possibility like financial freedom. Creating a budget will help you see your spending habits more clearly. This will help you decide where to cut back and where you can find financial opportunities so you can dream more fearlessly.

First, a snapshot. Then, a roadmap.

A budget helps you look at your current financial reality and help you reach your long-term dreams. Saving for a house, car, retirement, vacation or your kids’ college comes with unique considerations. Many plans are a combination of these goals happening simultaneously.

Between where you are and where you want to be are time, income and choices. Often, the income part is fairly set. But there may be hidden financial opportunities you’re overlooking. You can sort through your personal items and sell what you don't need.

Let’s start with your goals to help uncover what steps you need to take.

Finding hidden financial opportunities

It’s easy to focus solely on your budget and cutting expenses. But don't overlook ways to boost your income for your long term goals. Consider driving for rideshare services like Lyft or Uber during your free time. Or selling gently used items such as purses, clothing, or electronics online.

Downsizing possessions you no longer use can help eliminate storage costs. Review your streaming services and subscriptions—are there any you rarely use? Cancel unused subscriptions, including phone app memberships for extra savings. And regularly review these to help you uncover extra funds.

Go for the goals

What are your financial objectives? Lowering your debt, saving for early retirement, purchasing something? Put them all down, then rank their priority.

Income-ing. Where does your money come from? Paychecks, interest, a tenant, driving Uber, eBay? For budgeting purposes, consider fixed income like paychecks.

When you’re planning for the future, earning extra money from commissions, bonuses, or side jobs can inspire you to take action. Turning your dormant possessions into cash often takes a little push.

The costs of living. Add all your expenses—like rent, loan payments, credit card bills, groceries, and utilities. If possible, build in a monthly saving amount for planned events like holiday gift giving or travel.

Adding the day-to-day. Write everything you spend money on for a month, including coffee, gas, lunch, entertainment, etc. By identifying where your money goes, you’ll see where you can make budget adjustments.

You may be able to consult your online banking summaries to tell you which categories are getting the biggest chunks. For example, you might spend $7 a day on coffee, but you could use that money for much bigger rewards in the future.

You do the math. Subtracting expenses from income can be eye-opening. If you're spending more than you bring in, the first step is deciding where to cut back. If you have extra money at the end of the month, the first financial move is to pay off debt.

Getting out from under debt that charges you interest comes before everything else. After that, focus on building a savings to help with unexpected expenses like auto repairs, illnesses and more. Careful planning and saving will allow you to manage those surprises more easily.

Budget advice from the pros

Most money experts say it’s a good idea to budget at least 10% of what you earn. The earlier you start, the better position you’ll be in for retirement. Planners say you should have enough cash on hand to cover six to twelve months of expenses.

Lowering credit card balances means keeping more of your money. Convincing yourself that paying interest isn’t in your best interest will change your outlook on debt. If you get a promotion at work, put your raise straight into savings or pay down debt faster.

Making money healthy

Money has a strange power to make people uncomfortable. Taking control of your situation takes the power back. When everyone in your home agrees to follow a budget, it helps your family feel happier and reach your goals faster.

This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.