Setting Your Financial Priorities
Prioritizing your finances is very import for your financial plan. Determining what to prioritize is relatively simple, given that there are no complicated mathematical calculations involved.
Start With the Basics
Because turbulence and unpredictability are common themes in today’s economy, it is important for us to first consider the basics — the every-day expenses that all of us have — when setting our financial priorities. The basics the things that are essential for our survival, including food, shelter, clothing and utilities. These ought to always be our top priority no matter what. The basics should never be compromised.
Decide on Your Goals
You must a goal in sight if you want to prioritize your finances. Write down you goals you have on a piece of paper. Where do you want to live? What do you want to buy? Where do you want to travel? What sorts of things do you want to buy? By clearly defining and outlining your goals, you will be able to easily establish the order of your priorities.
Of course, if you are drowning in debt, one of your goals should be to reduce that debt. Not only will this increase your spending power, but it will also allow for a less stressful life. Being debt free is not only wise in and of itself; it also helps your other financial goals in coming to fruition.
PRO TIP: It’s important to weigh debt highly in your priorities. Not only does dealing with debt sooner save you money, but it also does something else important: it changes your relationship with your finances. You want your money to work for you rather than against you. This is solid investment strategy and solid financial prioritizing.
Make a List
Creating a list of concrete goals accomplishes a few things. First and foremost, it provides a target. This is crucial, especially during periods of temptation. Being able to see your goals can help to ease the anxiety you experience and will allow you to reorient yourself.
PRO TIP: Along this line of thought, having your goals in front of you brings you closer to your commitment to your finances. Consider your goal a covenant, an unbreakable promise. Having your goal in writing helps keep your priorities at the top of your mind.
Manage Your Spending
Your spending habits should always be in correspondence with your financial goals. This is especially true when it comes to larger purchases. If your spending does not favor your priorities or goals, then you should not be spending in such a manner, as it conflicts with what you want to achieve. How you manage your spending will dictate what comes of your priorities. The leverage of your spending power that comes from sensible, prudent spending will help to commit valuable financial resources to further your priorities.
Stay Your Course
Maintaining your financial priorities is important as you make financial progress. They can be somewhat flexible, of course, but not to the point of becoming unrecognizable. Stay committed to your priorities, particularly in difficult times, then you can enjoy the rewards that come that come once your goals are fulfilled.