One of the biggest reasons that people end up in debt, or end up complaining that they don’t have enough money to do what they really want, is that they don’t have their financial priorities straight. If you want to find financial freedom, and be able to have the money to do what’s really important to you, you need to determine your financial priorities, and then spend (and save) according to your priorities.
Determining Your Financial Priorities
The first thing you need to do is figure out what is important to you. Think about what you enjoy doing, and should be taken care of in your life. Some items that need to be taken care of include your housing payment, utility bills and other obligations. However, you might find that you are spending money on eating out for lunch each day, and then upset that there isn’t money to go to the movies. If going to the movies is more important to you than getting a paid-lunch each day, you can change things. Pack a lunch, and use the money you save to go toward an evening or two at the movies.
Take some time to honestly evaluate what motivates you, and what you enjoy. If you won’t be able to afford something all at once, you can make a plan to help you save up for it, by spending less on things that don’t matter as much to you. Be honest as you determine your priorities.
Make a Plan to Fund Your Priorities First
After you know what is important to you, and what financial goals you hope to meet in time, you need to plan your spending. Create a plan that will allow you to meet your most important goals first. Make a list of what you spend money on. Make sure your needs — housing, food, transportation to work, clothing — are taken care of first. Then, make sure your obligations, including your debt pay down plan, are covered. Next, consider setting aside money for the future (retirement fund, emergency fund) if that is important to you. Then list the “extras” that you do for fun.
If you are in debt, you might find that you don’t have a lot of money to do some of the “extras” right now. Making paying off your debt a priority, and paying it off as quickly as possible, will free up money for the extras. It can be painful to make these changes, but they need to be accomplished if you are serious about achieving financial freedom.
Once you have your priority list made, with the least important items at the bottom, you can start crossing things off. If you start at the bottom, you are more likely to feel less disgruntled about the items you are “missing” out on. When you get your financial priorities figured out, and stick to a spending plan that covers the most important items first, you will be more likely to feel satisfied with your financial situation, and your life.