Setting Priorities
Setting priorities for your finances is a personal thing. There is no size fits all because everyone’s circumstances, goals, and priorities are quite different and unique. What may work for one person may not necessarily work for another person or family.
So how do I prioritise my spending?
The first question is “Do you have any debt.”?
If you have a bit of discretionary money, that is money which you are able to decide what to spend it on then reducing your debt has to be a priority but then again it all depends on whether it is consumer debt, a student loan, or you have a mortgage. Getting rid of credit card or hire purchase debt has to be your number one goal because that interest quickly adds up. The crunch always comes when you have to pay it back and some people who took on loans without giving enough thought to repayments got a rude awakening when their statements arrived through the post or in the email.
You may not have any debt but will still have other priorities.
Your age has a lot to do with it and in saying that I am not suggesting that your age will determine whether you are going to get married, have kids, go on your big OE (Overseas Experience), learn to drive, or study because people do all these kind of things at any age these days. I am not suggesting for one moment that you take out a 30 year mortgage when you are 80 or train for a marathon when you are 100 though there is no law to say you cannot do these things. Evenone to their own I suppose.
Priorities change throughout your lifetime. What may have been important to you during your teens and twenties may not be of interest to you during your thirties and forties. Then stuff happens which can change your priorities. You may get ill or hurt in an auto mobile accident or at work which can change your priorities.
It really is up to you to decide what is important to you and your family if you have one. As I said at the beginning of this piece, “There is no size fits all” and what your priorities are dependant on your goals and circumstances.
Irrespective of who you are and at what stage of life you are at, it is important that you have a plan in place, that you have goals, and that you decide where you are going otherwise you will be like a life raft that is out on the ocean. It is at the mercy of the waves and will end up where the waves will take it.