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YWH Budgeting 101: Financial Goals

YWH Budgeting 101: Financial Goals

In this post, I will explain how we define our financial goals and how we tailor our bare bones budget to move towards those goals. If you haven’t created your Bare Bones Budget, click here to learn how!

Now that we have created our bare bones budget, we know how much money we need each month to live as well as how much money we have to play with. Now we can move onto deciding where the play money goes, as well as deciding if we need to cut back on any of our soft expenses. It’s time to determine our financial goals.

Everyone’s financial goals are going to be different and multi-faceted. Some financial goals will have a timeline, some won’t. Some financial goals will be saving goals, some will be spending goals.

But all financial goals should be flexible and realistic. And I should mention that these goals are not set in stone. Life happens, and sometimes you meet your goals for the month, and sometimes you don’t. But just having these goals in mind can help you make changes so that you can be successful in the long run.

So, let me first talk about the different types of financial goals you might have.

Nest-Egg Savings Goals

Your nest-egg savings is money that you aren’t planning on spending for quite some time. Nest-egg savings are typically saved for retirement, your children’s education, buying a home, or emergencies. Because the next-egg savings are for the long-term, you can start to build one slowly over time.

Allocation Goals

This type of financial goal is typically a short term goal in which you allocate funds to a large project. Paying for a wedding and completing home renovation item are good examples of this because they are typically not something you pay for all at once. Instead, you pay for smaller expenses over time that bring you to the completion of the project. It’s good to have a separate account for these goals, but I’ll address that in another post!

Debt Payoff Goals

This financial goal is pretty self-explanatory. You are allocating money to pay off a debt - credit cards, loans, etc. If you noticed in my bare bones budget, I list my car payment and my student loans. While those are debt payments, I am only paying the minimum so I will leave those as a firm expense. But if I wanted to pay them off more quickly, I could create a financial goal to allocate more money to those debts each month.

Quality of Life Goals

These financial goals are the fun ones! Your quality of life goals can include saving for vacation, spending on hobbies, spending on your wardrobe, spending on entertaining/dining out, basically all of the things that aren’t essential to living but that make you a happier person.


Before we nail down our specific financial goals, Justin and I talk about our priorities. Sure, we would like to save money in our nest egg, spend money on a new wardrobe, renovate our house, pay off our debt, and go on a big vacation, but we can’t do that all at once. At least not right now. So we have to prioritize. What is most important to us right now?

Right now, our highest priority is our home renovation. We also want to be able to live a little while we are doing our home renovations (to stay sane), so we will set some quality of life goals as well. Growing our nest egg is also something that we want to start setting aside money for. These are our priorities at the moment, so that is where our play money will go.

Setting Financial Goals

Now that we know what our priorities are, we can create our financial goals. And here is where our bare bones budget comes into play.

We start by taking a look at our bare bones budget to assess how much money we actually have to move towards achieving our financial goals. This information will ensure that our goals are specific, measurable, attainable, relevant, and time-bound. We want our goals to be SMART.

So let’s just say Justin and I have completed our bare bones budget and we have a total of $1500 to play with each month. Now we can decide how that money is used. And since we have already decided on our priorities, we will start with our biggest priority, which is our home renovation. Here is what our SMART financial goal might look like:

Specific: What exactly do we want to achieve? - We want to allocate $1000 per month to our house renovation project until we are ready to put our house on the market.

Measurable: How exactly will we achieve this? - Justin will transfer $500 per paycheck into our house renovation account. Breaking it down by paycheck makes it feel a little more manageable.

Attainable: Can we actually achieve this goal? - If we stick to our budget, we will have enough money to allocate to our home renovation project each month.

Relevant: Why do we want to achieve this goal? - Achieving this goal will allow us to stay on track with our home renovations, which will allow us to move into a long-term home at a good time for our family.

Time-bound: When will we achieve this goal? - We would like to achieve this goal every month.

We don’t always write down our smart goals, but we talk it through and make sure we are both on the same page and we have a clear idea on the how and why.

Alright, so we have allocated $1000 per month which leaves us with $500 left per month. Our other two priorities are our quality of life and building our nest egg. We will tackle our nest egg goal next.

Since our nest egg goal isn’t our highest priority, we are okay with growing it slowly and at a manageable rate. So our SMART goal for our nest egg will be:

We will put $200 per month into our nest egg savings fund. Justin will transfer $100 per paycheck into our nest egg savings account.

That leaves us with $300 per month unaccounted for. This will be our quality of life money! This is the fun money for going out to eat, doing fun things, getting a manicure, buying new clothes, etc.

Sometimes, we can make $300 work, but sometimes things come up.

The Art of Moving Money

Maybe one month we spend most our days at home, not spending much on anything and $300 is perfect for us. We might even have some left over to put into our house fund! But the next month, we have a birthday dinner at a fancy restaurant, we have to buy new shoes, and we decide to go on a little weekend getaway. This is where we can get our bare bones budget out and move some money around.

If we take a look at our bare bones budget, we can see where we can cut back in our soft expenses.

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For example, if we need $400 of fun money this month, that means we have to come up with $100 extra. And unless we pick up a side-hustle or money grows on trees (which it doesn’t), we have to move some money around. And by moving money around, we will have to cut back on somethings. But don’t forget, its only temporary!

So in this example, all we need to do is cut back by $20 in each soft expense to have that extra $100! If that is doable, then we are set. But, maybe we know we will need our budgeted $60 for gas. We can just take $10 more from two other categories to make up for it! The money can be moved around to make it work for you.

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This is why I like to keep our bare bones budget on something editable, like a spreadsheet or budgeting software. We love You Need A Budget because it makes moving money around super easy. If you have a minute, definitely check YNAB out!

To sum it up…

Defining and having financial goals is the driving force behind budgeting. Budgeting is the driving force behind achieving something (big or small) that might seem out of reach! In my next post, I will explain how we plan our paychecks to fit our financial goals and who pays for what (before and after marriage). If you have any questions, feel free to DM me or leave a comment below! And if this was helpful, please share with your friends!

xo, Madeline

Y.W.H. Budgeting 101: Bare Bones Budget

Y.W.H. Budgeting 101: Bare Bones Budget