Establishing Spending Priorities 54 Comments
We often hear all the little ways we can save money, but you have to realize that not all of those tips are suitable for everyone. Some of those tips are just too extreme for most people and some tips just go against our personal priorities.
Depending on your financial situation, you may need to make some sacrifices. At the same time, you don’t want to let your budgeting prevent you from enjoying the things you love.
Unless your situation is particularly dire, you do need to leave room for your major priorities. If you are in a very bad financial situation though, it’s probably time to make greater sacrifices at least temporarily.
Figuring Out Your Important Priorities
The part about personal finance advice that is difficult is that everyone is going to have their own priorities. It’s easy enough for an outsider to say that you need to spend less on a certain expense, but if that expense is quite important to you, that’s easier said than done.
So if you are looking to pay off debt quicker or save more money, take a close look at where you’re spending money. If you might be overspending on something or if something might be an unnecessary expense, ask yourself how important that expense is to you. Would you maintain approximately the same level of happiness if you gave up that expense or spent less on it?
The tough calls come with the purchases that give temporary satisfaction such as your daily latte or your fast food fixes. You may justify that those purchases are worthwhile since they at least make you happy for a short while. Is that very brief satisfaction worth paying more interest on debt or limiting your savings? Maybe it is that important to you, but chances are it’s an expense you can reduce.
In my case one of my major priorities is watching sports. Even though my finances are tight these days, I wouldn’t think of selling my big tv or dropping cable. Money would have to be much tighter for me to consider that option. For other people though, paying for cable may not be as big a priority and they would be perfectly happy without it. It all comes down to personal preference. The important part is that to maintain this expense, I was willing to cut back my spending on things like food, alcohol and other entertainment.
How Paying Extra For Priorities Helps Your Finances
Some people assume that you have to cut spending in every possible area to save the most money. If you have incredibly high willpower, that may be true. For everyone else though, spending some money on your high priorities helps keep you sane and allows you to maintain a stricter budget in other areas for longer.
If your budget is so strict that it doesn’t allow for any extras, that will often lead to unhappiness. You would become more likely to stop budgeting altogether or splurge in areas that aren’t true priorities.
Also if you are still treating yourself with some things that you really enjoy, it should be easier to limit yourself even more in areas that are less important to you.
Dangers Of This Thinking
Like many good things in life, this strategy needs to be done in moderation. It needs to realistically fit into your budget too. If you overspend on things you consider a priority, your budget will suffer.
For example, travel may be a high priority, but you’re sure to make a mess of your finances if you are constantly traveling when you cannot really afford it. Instead you should be doing closer to home traveling and limiting the number of trips.
Or lots of small rewards can also easily eat up your budget. If something like good food is a priority, you probably can’t afford fine dining and expensive meals all the time. It would be a good idea to mix in plenty of cheaper meals to even it out.
You really have to find the right balance between rewarding yourself and limiting your budget. Achieving the right balance can be a challenge though. Again it comes down to your personal situation.
What are some expenses that you make a higher priority in your budget? Do you feel that the extra spending in that area helps your overall budgeting efforts?