7 Ways to Work Out Your Financial Priorities
People are often under the assumption that budgeting has to do with cutting out things you enjoy. It’s become a scary term for many, which makes a bit of sense. No one wants to cut back on what makes them happy.
However, fiscal responsibility doesn’t mean that at all. There’s a way for you to prioritize your interests and necessities, and then weed out the hobbies and interests that you could probably live without. Over time, this is going to make you stress a less when you look at your bank account.
And let’s be honest, who doesn't want that?
We’ve compiled a list of seven suggestions to help you get on the right financial track and to a better, more stress-free life.
Make a list.
Begin by writing down the things you currently spend money on. In addition to these, think about what you need to buy and what you'd like to buy. Lay everything out in this list, because it’s going to make your mind feel less scrambled and more focused. Especially when it comes to tip #2.
Take the list you just created and rank everything in order of importance. Chances are, the things near the bottom of the list are not as near and dear to you as the things near the top. That means you can probably cut them out without too much angst. Plus, cutting out unnecessary expenses means you've got more money to spend on the things that are most important to you.
If you find the things near the bottom of the list are also things you love, all isn't lost. You can always reassess things in the future.
Revisit the list in a year.
Financial priorities change over time, so it's important to revisit your list further down the road. After a year or so, re-order it and see what's changed.
Remember those things you love that you had to cut? Maybe it's time to start focusing on those things.
Create an emergency fund.
This should always be a top priority, because you never know what’s going to happen in life. In 2014, the Federal Reserve said that about 47% of Americans weren’t prepared to cover a $400 emergency expense. That’s scary, when you think about it. Saving money isn't a fun priority, but it's one you should probably go ahead and do anyways.
Start your retirement fund.
Even if you’re in your 20s, it’s never too early to start planning for retirement, because this is going to be a huge priority for you later down the line. Ideally, you should be saving at least 10% of your income, but if you're new to the working world, you don't have to hit that benchmark right away. Every little bit helps.
Pay off your debts.
There’s a good chance that debt is causing stress in your life, too. Get that monkey off your back and start planning for ways to pay them off. The longer you wait on this, the more painful it’s going to get. This is another of those not-so-fun-but-totally-important priorities.
Download a budgeting app.
These days, there are more budgeting apps than any one person could ever possibly need. And honestly, the specific one you choose is not as important as finding one that works for your particular situation. If you've already got a million things going on in your life, something simple might be your best option. However, if you're serious about getting your finances in order, it might be worth checking out some more in-depth options.
Now go out and start saving. It feels good.