This is Part 1 of a 2 part process to get your plan developed and implemented because it’s one thing having a plan but it’s another to make it happen! That’s the key – put your ideas into action to make your dreams a reality.

There are essentially 2 steps to Part 1:

1. Understanding the cost of your goals
2. Designing a solid budget

1st – Take each of your goals and convert it to a monthly target to include in your budget. For example, if your top priority is to repay debt then start with knowing how much debt you have, what each debt costs you (the interest rate) and what minimum amount you must pay each month to remain in good standing. Total the total and divide by the number of months of your debt repayment target. If you have $20,000 debt and want to repay it in 3 years, then you can expect to put between $600 and $700 towards debt repayment to meet your goal. TIPS:

• Always make the minimum required payment by the statement due date (to keep your credit rating in good standing)
• Repay the debts with the highest interest rate first

2nd – This is where you develop a budget based on real information, include your goals and ensure that it all adds up. Your expenses and savings and/or debt reduction (goal) plans must be covered by your income. If they don’t, you have 2 options which are to reduce expenses or increase income. Using the information you gathered that tells you what you spend on a monthly basis (on average), develop a budget. With any luck, your income covers your expenses and goals. If not, it’s time to decide how badly you want to achieve your goals and what you are going to do to make it happen. TIPS:

• Always work with net monthly income (after taxes and deductions)
• If you are paid bi-weekly, try to budget using 2 pay cheques per month rather than 26 pay cheques over the year and if you are paid over 10 months, either set aside enough each month so you have enough over the remaining 2 months or have another plan to bring in what you need.
• Total up large or irregular annual expenses and divide into monthly savings instalments that you stash in a separate account so the funds are there when you need them – think property tax, vehicle insurance and vacations.

Next week I’ll blog about Part 2 of ‘How’ – putting a system in place to support your plan.