Step 5 – Set Money Goal’s for the monthly expenditure of each bucket account

Set Money Goals for the monthly expenditure of each bucket account and then have a weekly float for ‘Life’ and ‘Fun’ accounts so you have a weekly spend limit.

A worthy goal for you is to better manage your money and make the most of your current income levels. Understanding your expenses will help create behaviours that support your desire to make better decisions around your money.

Setting the critical ‘Money Goals’ allows us to determine the property price, renovation spend or investment for your next decision. It ensures that your outlay and ongoing holding costs will remain within your comfort level. Unfortunately, most people select purchase prices and investment figures without actually understanding their existing cash flow, let alone the changed cash flow and available funds buffer after the next major outlay. By developing your emotional intelligence regarding your Money Management ‘comfort’ levels, you’re in a better frame of mind and empowered to set goals to optimise your success with your Mortgage Strategy, Risk Management, Property Planning and Investing. Your money goals need to pass the pillow test – are you getting a peaceful night sleep without worrying about your finances?

Setting your ‘Money Goals’ is part science and part emotional preference. At Property Planning Australia, we can support you with our expertise and guidance, though you make the final decision. These goals are very important to create order in your world. A significant amount of research suggests that your monthly cash flow and the amount of available funds that you have access to rank in the top three most important factors for determining your ‘happiness’, ‘contentment’, ‘motivation’ or any other adjective you use for describing feeling good!

Conversely, if your savings and cash flow feel low to you, in other words, that they are outside of your comfort zone, you are more likely to feel stress and worried on an ongoing basis! Clearly, this is something that we all want to get right upfront before determining our Property Planning and Investment Strategy for our next major purchase! By developing a system that provides benchmarks for your monthly spending and surplus cash flow goals, you can achieve this with clarity.

Ongoing management will need to be a monthly review of your cash flow results, and ultimately, good habit forming that allows you to meet your ‘Money Goals’. To be able to determine your ‘Monthly Surplus Cash Flow Money Goal’, you’ll first need to define your monthly budgeting ‘Money Goals’ for your ‘Grow’, ‘Life’ and your ‘Fun’ buckets.

Your budgets for your ‘Bucket’ Money Goals are determined as follows:

1 Grow – How much will you budget for each month to spend on your fixed expenses in this account, distinct from your budgets for your ‘Life’ and ‘Fun’ accounts?

2 Life monthly expenditure – How much will you budget each month to spend on your ’Life’ expenses, distinct from your budget for your ‘Grow’ and ‘Fun’ accounts?

3 Fun monthly expenditure – How much will you budget each month for the fun things, distinct from your budget for the ‘Life’ and ‘Grow’? The difference between your income and bucket ‘Money Goals’ will be your ‘Surplus Cash Flow’. In other words, the amount of money you are able to save or put towards reducing your mortgage each month.

Other spending/budgeting goals – You might set other goals within your buckets or as part of other buckets. This may be for a wedding, starting a family, holidays or kid’s education. Based on your Surplus Cash Flow goal, are they achievable in the timeframe you would like?

Contact us today to book in a free confidential property planning, strategic mortgage broking, money management or property select meeting.

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