For many budgeting is a challenge. Even if you call your budget a spending plan, there are challenges inherent in deciding what’s “worth” your money. And, indeed, one of the most disappointing and frustrating things in life is trying to figure out why you aren’t happy with your financial situation — only to realize that you are spending money on a lot of things you don’t really care about.
In order to avoid frittering your money away on less important things, it can help to create spending priorities so that you are taking care of what’s important to you first. That way, you are less likely to reach the end of the month wondering why you don’t have enough money to do what you want.
Identify Your Values
The first thing you need to do is identify your values. Recognize what is important to you. Be honest. If you love buying Lord of the Rings action figures (like my husband), and it gives you satisfaction to get a complete set, acknowledge that. If you like eating out (as I do) be real about it. Also, examine your other values. What’s important to you? Some things that are most important to me (aside from eating out) include:
- My family, and spending time with them
- Being involved at my church
- Paying my monthly obligations (mortgage, bills, groceries, etc.)
- Giving to charity, especially the local Food Bank
- Preparing for the future (retirement, emergency fund, etc.)
- Travel/new experiences
- Music, and improving my talents in that area
So, my first priority is to be able to spend time with my family. Luckily, I don’t need to spend a lot of money to enjoy a bike ride with my son, or an evening in with my husband. However, I may need to slow down on the work, and not be so concerned with making a few more bucks if I want to have time to play a game with my son.
The rest of the things that are items that might require expenditures, and I want to be able to make sure that the most important things are taken care of first. And that is usually fairly easy, since I make an effort to align my spending with what I value.
Spending According to Your Values
Now that you have evaluated your values, and decided what’s important to you, it’s time to put that knowledge in action, and spend according to your values, as well as according to your obligations. If your most important goal right now is to get out of credit card debt, after you meet your obligations, more of your money should go to debt reduction. When you allocate more of your money to debt reduction, you’ll see a bigger impact, and it will encourage you to keep going. Plus, you’ll feel good because your money is doing what you want it to do.
When you have your spending priorities figured out, and you devote your money to funding those priorities first, you will feel more satisfaction, in general, with your life and your finances. And, if you do have to cut back some months, you can do so by dropping the items at the bottom of your list. That way, your spending cuts are made to less important items, and you still have money to fund the things most important to you.
What are your spending priorities?