Budget SMARTer

Alright, let’s hear it. You’re looking over your spending at the end of the week or the end of the month and you’ve realized that you haven’t accomplished what you were hoping. You didn’t pay off as much debt as you had hoped, you spent more on groceries than expected, or, my personal favorite, you spent way too much on COFFEE?!?! Don’t worry, just like you and many other Americans, my wife and I have spent way too much on coffee in the past when we weren’t in control of our money!

“How did that happen? I didn’t think I spent that much! What am I going to do now?”

Well, fortunately for you, a moment like this can really cause you to change your habits. The scenario you just read is one of somebody that is being controlled by their money. Most likely, they budget poorly with very vague goals, or worse, they don’t budget at all. They spend freely without realizing what the consequences are until it’s too late. But, you just had your moment and want to know how you can improve going forward.

When it comes to budgeting, I always recommend taking the SMART approach (for those that haven’t heard or seen SMART, it stands for specific, measurable, attainable, realistic, and timely). So, how can you do that?

Specific – Just like when setting other goals, your budgeting goals need to be specific. Rather than saying you’re going to pay down debt this month, give it a number and say that you’re going to pay down $200 in debt this month.

Measurable – Fortunately, with money, it is easy to measure. But, this only works if you are tracking your spending and comparing it to your budget. If you’ve read my previous post, you have access to the budgeting and spending spreadsheet I created. If not, I’ll link it below.

Related – Why Budgets Fail

Attainable – With budgeting, you don’t want to do anything that is overbearing. Make it a goal that can be accomplished so that you reap the psychological rewards and build momentum.

Realistic – Are you going to pay down $3,000 in debt this month? Maybe, but only if you have $3,000 left over after all of your other bills and expenses are handled. If you don’t, then you probably won’t. Budgeting goals must be realistic so that you have a better chance at reaching them.

Timely – This one is best suited for debt. Once you have all of your debt listed out and are starting to pay it off, give yourself a date when you will be #debtfree. Put it on the calendar or download an app that gives you a daily countdown. If you are working for something and have a deadline, you will have a better chance at accomplishment.

Perfect! Now that you have a better understanding of how SMART goals can be used with budget setting, take some time to rethink your strategy. Put them into play. They will lead you from being CONTROLLED by your money to being in CONTROL of your money!

Question for you – What type of goals or process do you use when preparing a budget?

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