Long Term Budgeting: Planning Past the Present

Successful budgeting can be difficult, even when you’re only thinking about things on a month-to-month basis. Things can get overwhelming when you start thinking about budgeting in the long-term for bigger expenses. For example, like a future home, paying for college, or retirement- in the future. But it doesn’t have to be! In fact, long term budgeting isn’t fundamentally all that different than short-term budgeting; it just requires a little bit more work and commitment. Here are a few tips for creating a long-term budgeting plan that can keep you on track for those big purchases you want to make down the line. 



1. Make a Cost Estimate

The first step to budgeting for a long-term future expense is doing a little bit of research to get a rough estimate of how much you’ll actually need saved to reach your goal. This comes with its own difficulties. Things like the future housing market and college tuition are not always easy to predict, but giving yourself a range to work with can give you a baseline goal to reach.

2. Create a Timeline

Once you’ve figured out about how much money you’ll need, it’s time to figure out a timeline; determining the time frame will give you the ability to sketch out the yearly amount that you will need to save, which can then inform what you’ll need to tuck away monthly. This can be valuable because it will not only let you build out a budgeting plan, but it will also tell you if the plan that you have is realistically attainable in the time that you’re aiming for.

3. Be Flexible

It can be enticing to push yourself to reach your goal in the time that you’ve laid out, but remember that finances are not always totally predictable. Try to be flexible with your  expectations! If you have a year that you don’t reach your goal don’t stretch your finances too thin to make sure you reach your goal exactly when you were hoping to. It’s better to take a little extra time comfortably than to rush yourself and end up in a position that is uncomfortably tight.

4. Put Your Money in the Right Place

One of the keys to budgeting in the long-term is putting your money into accounts that are both safe and secure, and that will ultimately allow your money to grow. HRCCU offers a range of different accounts that can help with this, in the form of high yield savings accounts, and certificates of deposit! Each of these accounts allow you to contribute money for longer term investments with higher APY rates allowing your finances to grow, and ultimately helping you achieve your long-term financial goals faster.