Set Financial Goals and Budget

Prepare Yourself

The first step in your investing journey is to set clear goals for your future. Do you want to save to buy a home? Or are you looking long-term for a comfortable and secure retirement? Regardless of how ambitious the goal may seem, write it down and attach a date by which you aim to accomplish the goal. This will help you establish priorities and set realistic timelines.

Create a budget

A budget is a powerful tool that can help you manage your money so that your needs are taken care of, you have savings set aside for emergencies and for the specific goals you have set. It is also key to determining if, or how much, you can invest, so your money can get to work building wealth for you.

A budget is at the core of any financial plan. A budget is an estimation of money you expect to receive and money you expect to spend over a period of time in the future.

For budgets to work, you need to be clear about what your goals and priorities are. You also need to follow your budget consistently and review it frequently to ensure that you update it as your circumstances change.

To get started, use the budget calculator to help you achieve your savings, investment and other financial goals.

Tips when creating your budget

  • Determine your goals. Be sure to have an ‘emergency fund’ as a part of your goals, if you don’t already have one. Many investment advisors recommend that everyone set aside three to six months of income for an emergency, such as job loss.
  • Prioritise. Separate the things you need from those you want. It seems obvious, but be sure to take care of your needs first. If you find that you are spending everything you make, you will have to find a way to cut back on your expenses or to earn additional income. See tip 6 about watching for the ‘little things’ that eat away at your income and wealth.
    Make sure saving is a high priority. A strategy of many successful savers is to always ‘pay yourself/your family first’ by setting aside savings before addressing any other needs. To help them succeed, some people ensure that when they get paid, some of their pay check is sent directly to a savings account. 
  • Pay off credit card debt as quickly as possible. Aim to never spend more on your credit card than you can pay off in a month. When prioritising your goals, if you have balances on your credit cards, paying them off should be a top objective. Very few investments, if any, will ever generate sufficient returns to offset what a credit card will take out of your wealth through interest charges. 
  • Remember irregular expenses. For many people and families budgeting is easiest to do on a monthly basis, as many bills come due on a monthly cycle. Be mindful of expenses that are not due during your regular budgeting cycle. For example, in your birthday month you may have to pay to insure and license a vehicle. Plan to have money set aside for events like these. 
  • Track your expenses. Keep a record of what you are actually spending. This will help you to understand your spending habits and provide excellent information should you need to adjust your budget to be able to save or invest more. Keep a notepad and pen handy, or download a mobile phone app that will help you to record your actual spending right away. Don’t wait too long to record expenses either, or you may forget them. 
  • Don’t overlook the small expenses. You might be surprised at how much you spend on the little things, like those extra data charges for the movies and music you download on your mobile phone. Cutting back on a cup of brand-name coffee every day could save you thousands of dollars in the long run. Now that you’re tracking your expenses, look at where you can cut back so you can have more money to achieve your dreams. 
  • Get into a routine. Review your budget regularly and make managing your finances a matter of habit!