Budgeting 101: Step 2- Taking Charge of Your Money

If you completed the first part of this challenge, Where’s Your Money?, then you are likely ready to proceed to the next step and take charge of your money.  

Defining the areas that most need your attention

Now is the time to define your goals (this can be done on an individual level or with a family) and redirect your funds appropriately.  At the end of 2007 DH and I had a sitdown (we actually had several sitdowns over a number of days) and determined which areas of our life needed our attention most for 2008.  We made individual lists and then compared and narrowed it down to the following goals:

-We want to have security in retirement, and possibly early retirement, and 15% was not going to cut it unless we wanted to work tirelessly for another 40 years

-We want to complete advanced degrees and start taking classes again.  Our employer doesn’t cover the entire cost of education.

-We loved our honeymoon and felt we needed to travel more this year, particularly during winter months to warmer areas.

-We love eating out and wanted to do it more often as a way to spend time together.

-We were tired of weeks passing by without days off together and we were determined to resculpt our schedules so that we could spend time together on a weekly basis. 

How we redirected funds to meet these needs:

-Retirement Security- we maxed out our ROTH IRA contributions and raised our 403B spending from 15% to the maximum contributions of over $1000/month/each allotting nearly 50% of our income to this goal

-Education- continue to pursue advanced degrees so we allotted 5% of our annual income in addition to the money provided at work

-Travel- we hope to take at least 4 trips/year including one big, international trip each year to explore new countries and have allotted about 7% of our budget for this in 2008

-Nutrition- we enjoy eating and so we raised our budget to include roughly 2 meals out monthly instead of one in 2007.  Our total food expenses are about 5% of our budget

-Marriage- we wanted to spend more time together each week so I changed my work schedule and we have both made sacrifices but now we generally have 2 days and 2 nights of uninterrupted time together each week which required me to take a paycut and work longer hours daily but which has satisfied us both very much

What areas of your life need the most attention over the next year?

What are your goals to improve these areas of your life?

How can you redirect your funds to these areas where they are most needed?

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