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Long-Term and Short-Term

When you are budgeting your money, you might want to think in the short-term, over the next few months, or in the long-term, maybe over the next few years. This helps you to plan your finances and prepare for your future, as well as your everyday expenses.

Long-term budgeting may help you save up for a special item, such as a computer console, a holiday or a mobile phone. It is also a good way to prepare for big investments like a mortgage or a car. It makes sure you can make financial plans for the future.

How: To budget properly in the long-term, you need to look at how much you are going to save each week or each month and for how long, until you can afford what you want. Be realistic when you are budgeting - you are only fooling yourself otherwise!

Short-term budgeting is just as important as long-term budgeting. Short-term budgeting can help you cover everyday expenses, like food, transport costs or bills, as well as help you buy small one-off things like birthday presents or CDs.

Budgeting in the long-term and short-term means looking at your income and outgoings and being realistic about what you can afford. Remember, if there are outgoings that don't happen each month, like a haircut or Christmas, try and spread the cost of these over the whole year so a small amount will appear for them each month instead.

Savings Goals

Some people find it hard to get motivated about saving, but it’s often much easier if you set a goal. That way, rather than thinking about the money you are setting aside each month, you can focus on what you will be able to do once you’ve reached your goal.

Your first step is to have some emergency savings – money to fall back on if you have an emergency, such as a heating boiler breakdown or if you couldn’t work for a while. Try and get three months' worth of expenses in an easy or instant access account. Don’t worry if you can’t save this straight away, but keep it as a target to aim for.

Once you’ve set aside your emergency fund, possible savings goals to consider might include:

  • Taking a holiday without having to worry about the bills when you get back
  • Going to uni without having to take out too big a student loan
  • Having some extra money to draw on while you’re on maternity or paternity leave, or
  • Buying a car without taking out a loan

If you want help budgeting, try talking to your parents, the Citizens Advice Bureau or an independent financial adviser.

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