Budgeting Step 2: Decide Where You Want Your Money to Go

Part Three in Our Series on Budgeting to Reflect Your Values

Start this series from the beginning. 

You did it! You did the scary part! You figured out where your money is going. Congratulations! I’m really proud of you.  I bet your mom is too.  Now let’s get onto the fun stuff.

I’ve got a few questions for you; I know these questions well because they’re some of the first ones I ask every new client.  What are your goals?  I’m not talking about your financial goals; I’m talking about life goals.  What do you want to do?  This isn’t a test; there are no right or wrong answers, and I am certainly not here to judge.  Do you want to travel the world?  Buy a house?  Get married and have kids?  Work your dream job until the day you die?  Stop working when you’re 55 and volunteer your time?  Start a business?  Give away thousands of dollars to a cause you care about?  Whatever your goals are, take some time to think about them, and write them down. 

Now that we know what our goals are, we can start thinking about where we want our money to go.  Money reflects values, remember?  The whole point of managing money well is to be able to use it for the things you really care about.  I’m not trying to take it from you; I’m here to coach you to redirect it and use it in ways that matter to you.

These aren’t set in stone.  They’re going to change.  No one is going to hold you to this for the rest of your life.  You’re young! You’ve got a lot to do, and you’re not quite sure where to start.  That’s totally okay.  But please believe me when I say that working toward something right now will get you a lot further than not starting because you just don’t know what’s next.  Maybe right now you want to take a $15000 trip around the world.  We find out it’s going to take you about a year to save up for it.  In that year you decide that, actually, you’d rather buy a house.  Guess what! You’ve been saving up for a down payment, and you didn’t even know it!  Boom, we’ll just redirect your goal to reflect what you want now.  Sounds a little better than being in the same spot with no savings and no goals a year from now, doesn’t it? 

Alright, you’ve written your goals, as they stand right now.  We agree that they are subject to change, and we’ve given ourselves permission to be okay with that.  Now let me ask you something: do your current spending habits reflect your goals? 

Ouch.

Did that one sting a bit? 

That’s okay.  That’s why we’re here. 

A Note to Couples

This step is especially important for you.  In my unqualified opinion, this question of "what are our goals, and where are we going?" is one of the most important conversations you will have as a couple, and the earlier you have it the better.  Don’t skip it because it feels uncomfortable.  If you don’t have this conversation, you will have it a million times over in the form of fights, so you might as well just do it now. Ask each other: what are our goals?  What do we want to accomplish as individuals, and what are we working toward as a family? I think you’ll find this conversation to be one of the most important you ever have.   

A Footnote

I really do want this budget to be yours, and something you get excited about, but a lot of people I work with also want some guidelines for how to get started.  That is hard to do because every situation is different.  This is where working with an advisor comes in.  If you want to know whether you should pay off your student loans or start investing in retirement, I’d encourage you to talk with someone who is trained to help you figure out your options.  This is what we love to do.  We’re here to help.

About the Author 

Stephanie Vail is a member of the Custer Financial Advisors team.  She specializes in helping millennials with financial literacy and planning.  To learn more about Stephanie and Custer Financial Advisors, visit www.CusterFinancialAdvisors.Com or email Stephanie at SVail@lpl.com.