April is Financial Literacy Month. At NBIC, we believe financial literacy is one of the biggest obstacles that prevent clients from achieving business success.
To celebrate Financial Literacy Month, we’re going to share a series of posts with key ideas about financial literacy that we’ll go over for the rest of the month. The four topics we want to share are:
- Myths about financial literacy
- Budgeting for yourself and your business
- Saving for big goals
- And getting ready for retirement (yes, right now!)
This post will focus on saving for big goals.
Why should we save for goals?
It’s common to have a big expense goal. That goal can vary, from upgrading to a larger home to better suit your family, to purchasing a new vehicle or taking a special vacation. Any goal that cannot be covered with a monthly budget—like the three examples we just mentioned—are what we consider a big goal.
Big goals are also desired for a business. New equipment or machines, a building, or even business vehicles can be tempting purchases.
You may be further tempted to finance some of these big goals with credit cards or personal loans. While that makes sense in the case of a home, if the home fits in your budget, you might need to think twice about using credit on big goals.
Financing expenses with credit will take away from your future earnings. You will have to set up monthly payments that will take away from your earnings, lowering your overall income. For each big goal you want to obtain, there are interim steps you can take, such as leasing a work truck, that still allow you to get necessary work done.