Unit 4: Measurable Success

Reaching Your Goals
Whatever your financial goals are, you need to focus on the budget as a tool to reach these goals.  If you stick to your budget, what will you achieve?

  • Stay Motivated.  Consider rewarding yourself, or even increasing your goals. You need to find something that will push you to go the extra mile. If your goal was to have a credit card paid off in eight months, challenge yourself to pay it off in seven months. If you do, reward yourself with something you enjoy.
  • Keep Realistic Expectations.  One common budgeting mistake is setting unrealistic expectations. If you set your sights too high, you only become discouraged when you fail to reach them. Set goals that are challenging yet realistic.  Create smaller goals over the coming months, you can see how likely you are to accomplish them, then, build upon those goals to set your sights a little higher.

Download PDF: Working With Goals

  • Monitor Debt-Income Ratio.  Make certain to keep focused on reducing your total debts.  Over the next few months, use the debt-income ratio as a measure. Take the total of all monthly debt payments, and divided that amount by your monthly gross income. The result should be equal to or less than 36 percent.

Debt-Income Ratio: All Monthly Debt Payments ÷ Monthly Gross Income (Ideal result equal to or less than 36%). 
A variety of methods are available for making sure you stay on track with your budget. 

  • Checking Account Register.  Use a checking account register to track your income and expenses as you write checks and withdraw money.
  • Budget Spreadsheet.  If you’re comfortable with computer spreadsheet software, you can create a worksheet with all your budget information. 
  • Personal Finance Software.  Software programs allow you to track money in various accounts and provide summaries of your loan and credit card balances. 
  • Budget Worksheet.  Use budget worksheets provided to continue to monitor spending, minimize expenses, and eliminate outstanding debts. 

Suggested Monthly Spending Amounts

Most creditors use household monthly budgeting guidelines when reviewing and approving credit.  Compare the guidelines to your expenses.  If you are concerned that you are overspending, use the suggested monthly spending guidelines provided:   

  • Housing 35%: Monthly payments such as rent, mortgage, taxes, repairs, improvements, insurance, and utilities.
  • Transportation 20%: Monthly payments such as gas, oil, repairs, insurance, parking, or public transportation.
  • Debt 15%: Monthly payments such as credit cards, personal loans, student loans, and other debt payments
  • Other Expenses 20%: monthly payments such as groceries, prescriptions, clothing, or personal items.
  • Savings and Investments 10%: Monthly contributions towards retirement or investment portfolio or savings account

If You Need Additional Help

Should you need additional help creating a budget, we have partnered with Trinity Debt Management, a nonprofit credit counseling agency.  Trinity provides an informative budgeting workbook with detailed worksheets to help you categorize expenses.  Request It’s Not What you Make, It’s How You Spend at 800.785.3844 or download a copy at trinitycredit.org. 

Back | Take Quiz!