Money

Establishing Spending Priorities

One of the most important things you can do for your finances is to establish spending priorities. When you prioritize your spending, you make sure that the most important items in your budget are funded first. This means that the most important things in your life, such as making sure your housing payments are made, as well as ensuring that your children are properly fed, are taken care of first. Spending priorities are essential if you want a budget you can stick to.

Identify Your Values

Before you can establish your spending priorities, you need to identify your values. Take a step back, and figure out what’s most important to you right now (this might change over time). Perhaps it’s important to you that your kids get a wide variety of cultural experiences, or important that you have time to volunteer for a local charity, or vital to you that you get out of debt. Whatever is most important to you, acknowledge that. Your spending priorities should revolve around what is most important to you.

Prioritizing Your Expenditures

Now that you know what is important to you, look through your spending. If you already track your spending, this exercise is fairly simple. Go back through the couple of months of expenditures, and see how they match up with your values and what you think is important. If you haven’t been tracking your spending, now is the time to start. See what you have been spending your money on. You might be surprised at how much is going to items that aren’t that important to you. These are items that can be trimmed from your budget.

As you put together your new budget or spending plan, you need to consider your values, goals and what’s important. If you want to make sure that you have enough to do the things that are most important, you need to plan to do those things first. Make sure your budget revolves around your most important priorities. If you run out of money, you can cut the things that are less important from your budget.

Bottom Line

Your spending should reflect your priorities. There is no right or wrong answer when it comes to figuring out what is important to you. Just make sure you are honest. That is the basis of creating a budget that works for you — and that ensures that the most important things are covered.

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