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Making Every Penny Count

This article is part of a series on budgeting. To learn more about budgeting, you may want to search for the budget-related articles in our Knowledge Center Library.

Setting Financial Goals

After comparing your income and expense information, the next step in the budget process is to set financial goals. It's a good idea to set short-term goals, which you can accomplish within one year, and long-term goals, which can take five years or more. You may even find it helpful to set mid-term goals, which can take one to five years. However you decide to set your financial goals, make sure your goals are realistic, measurable, and achievable.

  • Realistic goals can be achieved in a specified timeframe
    • Paying off a $2,000 credit card balance in two years is a realistic goal, while paying off a $200,000 credit card balance in the same timeframe is probably not.
  • Measurable goals can be quantified
    • Putting $10 in a savings account each week is a measurable goal, while putting random amounts of money in a savings account is not measurable.

See the University of Tennessee Extension publication Setting and Achieving Financial Goals.

Eliminating Credit Card Debt is a Measurable Goal

While your financial goals are specific to your situation, you may want to consider setting the goal of getting out of debt as your number one priority. If you have credit card debt, you might consider reading the related articles in our Library. If you're only paying the minimum amount due, it can take you many years to pay off your credit card balance. Making payments greater than the minimum amount due can substantially lower the pay off timeframe and total interest paid. For example:


Making Minimum Payment Only

Paying $20.00 Extra Per Month


Making Minimum Payment Only

Paying $20.00 Extra Per Month

Current Balance



Current Balance



Annual Percentage Rate (APR)



Annual Percentage Rate (APR)



Monthly Payment



Monthly Payment



Payoff Timeframe

24 Years and
1 Month

6 Years and
1 Month

Payoff Timeframe

12 Years and
4 Months

4 Years
11 Months

Total Interest Paid



Total Interest Paid



Total Amount Paid



Total Amount Paid



Once you've set your goals, how do you meet them? Focusing on managing discretionary and variable expenses is an excellent way to meet your financial goals.

Managing Discretionary Expenses

Track your daily expenses in a notebook for a month. You may be very surprised to find out how much you spent. You're not alone. The little purchases add up. For example:


Item Cost

Per Week

Per Month

Per Year

Cup of coffee
Five days/week





Pack of cigarettes
Seven days/week





Eating lunch out
Five days/week





Dinner out for two
Two days/week





The amount you would actually spend on these items may be different, but it's clear that discretionary expenses can use up a large part of your money. A good way to think of a discretionary expense is as something you want rather than something you need. Examples include:

  • Subscribing to cable pay channels
  • Going to the movies
  • Eating out
  • Using extra telephone services, such as call waiting, caller ID, and voicemail
  • Getting cups of coffee at a store
  • Going to a salon to have a manicure or a pedicure
  • Having your clothes dry cleaned
  • Paying for Internet service

Think about your own expenses. Where can you eliminate or reduce discretionary spending to help meet your financial goals? For example, if you can't stop eating out completely, how about taking lunch to work three days a week? You'll save approximately $728 a year that you can use to help with debt. Other ways to save on discretionary expenses include:

  • Canceling cable pay channels or canceling cable completely
  • Renting movies instead of going to the movies
  • Grocery shopping for lunch and dinner instead of eating out
  • Canceling extra telephone services
  • Making coffee at home and taking it to work
  • Learning to do your own manicures and pedicures or asking a friend to help you
  • Using products that can dry clean your clothes in a dryer or stop buying dry clean-only clothes
  • Use a free Internet service provider

Another way to save on discretionary spending is to do things that don't cost anything. Read our Money Savers tips or our Guide to Getting Things for Free article in the CareOne Credit Knowledge Center Library.

Managing Variable Expenses

It's also a good idea to look at variable expenses as a way to decrease spending. Variable expenses can change month to month, such as:

  • Long distance
  • Electricity
  • Transportation

Think about your own expenses again. How can you account for variable expenses and keep them as low as possible? Using the examples above, you could:

  • Eliminate some or all long-distance calling
  • Write letters or use email instead of the telephone to communicate long distance
  • Turn all lights off when not in use
  • Switch from 100 watt bulbs to 60 watt bulbs
  • Set your thermostat to 65 degrees in the winter and 75 degrees in the summer to save on heating and cooling
  • Carpool to work
  • Trade in your gas guzzling sedan for a more economical compact car

Remember that creating and managing a budget plays a crucial part in your financial health and gives you the control you need to meet your financial goals. Visit the CommunityCorner.org website for a fun and colorful article about Budgeting Basics.

Take control of your finances with our debt help tools. Use our calculators and budget planner to help you manage your money.

If you liked this you may also like:

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  • Where Does Your Money Go?

    Ever wonder where your hard-earned money goes each month? You can find out by simply organizing your finances through a budget.

  • 101 Ways to Trim Your Budget

    Managing your finances is never easy-just ask any of the millions of Americans who struggle on a daily basis to live within their means. The key to successful financial management is effective budgeting. Unfortunately, creating a budget and sticking to it can be extremely difficult-but it is doable. Read on for 101 ways you can reduce your budget (and your stress) with a little planning, patience and practicality. So, are you ready to take control of your financial future?

  • Planning for Financial Success in the New Year

    By now, you’ve probably broken a New Year’s resolution, or two, or three. But there’s one resolution you can’t afford to break and that’s getting out of debt. You’re on the right path to success being on a debt relief plan, but this is no time to let your guard down. Toward that end, here are 9 tips to help you keep your commitment this year.

  • Five Ways to Save on Your Garden

    Following are five ways to save on your garden: 1) Grow from cuttings. Instead of spending at the nursery, use cuttings from your current plants to grow more greenery. 2) Skip the weed killer. Chemical killers can get pricey. Use a spray bottle of vinegar to kill unwanted grass and weeds, and even keep ants away. 3) Check online. From fertilizer to lawnmowers, try craigslist.org before shelling out big bucks. 4) Visit the dump. Large garden pots cost a fortune; old bathtubs don’t. Try your local dump for creative containers. 5) Reuse, recycle. Old panty hose legs make great ties for tomato plants—they even stretch a little to let your plants breath.

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