Budgeting Your Finances By Priorities

If you value living debt free, but have too much month at the end of your money, a budget is a great way to live, and prosper, on what you earn. Out of control finances is a powerful source of stress. But getting your finances under control brings peace of mind.

Let’s build a budget based upon priorities. What is most important to you? Fun or Future?

If you aren’t living at home with Mom (or don’t want to end up going back there), then your home is probably your first priority. And, the utilities are part of that priority, unless you want to use candles for light and a wood fire for cooking!

Next might be your expenses related to employment. Why is this a priority? If you don’t keep your job, then your budget will be easy: nothing divided by priorities still leaves nothing! What does it cost to go to work? Gas and tolls to get to work and return home are work expenses. Clothing and care of clothing are also work expenses. A secondary expense for employment includes car payment and maintenance.

Let’s see what we have so far:

1. Mortgage or rent
2. Utilities (electric, gas, water, etc.)
3. Gasoline and tolls
4. Vocational clothing and care expenses
5. Auto payment and maintenance

Next we need to protect these investments with insurance. Protecting the investment of your health (so you can work) means health insurance. Protect the investment in your home with home or renter’s insurance. And, protect your investment in your automobile with car insurance.

6. Insurances (health, home and auto)

Food. Budget for eating at home and at work.

7. Food

By now you may be starting to realize that failing to manage your money has put you into debt, and you can’t spend just whatever you want whenever you want and still have money for necessary expenses. It is an adult reality of life that we have to live within our means. (That means “if you ain’t got it, don’t spend it”.) Otherwise we end up in the sticky pit of debt, debt and more debt.

It is time to plan to invest in your future. This includes life insurance and savings. Putting money in a savings account is a way to pay yourself and prepare for future emergencies. If you value being self-sufficient, then you will prepare for your future. Failing to plan is planning to fail.

8. Life insurance

9. Savings

Now, here is the problem. Most people put their entertainment and personal interests ahead of essentials. We haven’t even discussed those in this budget, because we are budgeting by priorities.

Is there anything left over after going through this budget? If so, enjoy! If not, then if you want to play, you will have to find ways to cut back on the essentials. Financial management requires that we live in a home that we can afford. If your mortgage or rent is too high for your income, you probably need to take a heavy dose of reality and downsize.

Are you paying too much for utilities? Manage your use of electricity. Turn electrical devices off when you aren’t using them. Shop for a better electricity rate. Change the settings for air conditioning and heat. Get your utilities within your budget.

Your car payment is a possible variable. If your payment is too high, then consider trading cars. You can trade down and get a lesser payment. Do you need the vehicle you drive, or are you driving your car or truck for show and prestige? Get your values straight and drive a car you can afford that will get you where you need to go until you increase your income and can afford a luxury auto.

One other thing: children. If you have children and can’t feed them and pay school expenses because your house and car are for show, ask yourself if you really love your kids, or yourself, more. Get honest about what your real priorities are, and think about whether you need to change your priorities.