Every month, your paycheck is divvied up, and you spend the money on various expenses. From paying for housing to buying a new book, your money is claimed. And, when the month comes to an end, there is a reckoning. How much do you have left over? And did you accomplish what you wanted with your money?
To me, the more important question is whether or not you managed to accomplish what you wanted with the money. If you want to feel more content with your finances, and with your situation, it helps if you are spending according to your priorities.
What Do You Want Your Money to Accomplish?
As you work to establish your spending priorities, you need to first ask yourself what you want your money to accomplish. If you want a more secure financial future and retirement, one of your spending priorities needs to be contributing money to a retirement account (preferably one with tax advantages).
Remember that your money is a tool that you can put to work on your behalf. This means that you need to decide what you want your money to accomplish. I want my money to do the following things for me each month:
- Build a retirement nest egg
- Pay my bills (mortgage, groceries, utilities, insurance, etc.)
- Create an emergency fund
- Help others (through charitable donations)
- Build my son’s college fund
- Reduce my student loan debt
- Cover my son’s extracurricular activities
- Provide me with experiences I enjoy (travel, eating out, spa, reading)
Basically, I make sure the most important things on the list are accomplished each month, usually with the help of automation. My retirement account contributions, many of my bills, and my emergency fund efforts are all taken care of automatically. I’ve even got a regular automatic contribution set up for the local food bank.
Once the most important things on my list are covered, my money can accomplish other things on behalf of my family. Indeed, once the most important priorities are covered, we pretty much spend our money until it’s gone each month. If we have to skip eating out toward the end of the month, or if we can’t buy a new toy for our son, it’s not that big a deal, since those items are a little lower on the priority list.
Cover Your Your Priorities
It’s much easier to cut your spending if you are dropping something that wasn’t all that important to you in the first place. This is why I figure out my priorities. My husband and I sit down and decide what is most important to us for the month, and make sure that those things are covered. It’s a good way to make sure that we are happy with our spending choices. Rather than reaching the end of the month and being upset that we didn’t do everything we wanted, we reach the end of the month and feel good about the fact that our priorities were taken care of, and that our money is accomplishing what we want it to — according to our own values.
Image source: TaxCredits.net