What Are Your Financial Priorities?
No matter what stage of life you are in, you should undoubtedly have financial priorities which help you make decisions when it comes to spending and saving. It follows that people at different stages of life will have different priorities according to their situation and according to their needs. When considering your financial priorities, it makes the most sense to plan ahead: for the next year, the next five years and the next decade. Planning can help you decide what’s important to you and allows you to track milestones as you reach them. We have put together a list of common financial priorities to help those who are struggling to find direction in financial matters.
Affording Basic Essentials
Prioritising regular expenses like food, shelter, utilities and transport is a no-brainer. We need these things to survive and so they should always be the first priority when it comes to financial planning. If you have financial goals, it helps to cut down basic essentials to a fundamental level: eat meals at home, work to reduce utilities, drive cheap cars.
Paying for Insurance
Insurance is almost an essential and should thus be considered as priority number two. In an emergency, be it a health, disaster or vehicular emergency, insurance is always cheaper to have than to go without. Health and car insurances are particularly crucial to have in this regard and should be paid for in full on time.
Maintain an Emergency Fund
This item is particular important if you have dependents who rely on you. Maintaining an emergency fund can truly bring peace of mind, particularly in uncertain times like those facing Australia right now. If you have an emergency fund, make deposits regularly, but don’t touch it unless a true emergency strikes.
Paying Off Debt
This one is a good way to save money in the long run. Debt accrues interest over time and by making regular payments you reduce the total interest you’ll have to pay. Don’t get burned out trying to cover your debt faster than you’re able to, but consider sacrificing social occasions or discretionary purchases where you can in order to pay off debt faster.
Social interaction is exceptionally important to maintaining good mental health and should not be sacrificed entirely in order to achieve other financial goals. Be sure to allocate some funds for socialising with friends regularly and for building new relationships.
This last item on the list can be considered a priority when there is enough income to sustain non-essential purchases, like hobbies, recreation and luxuries. Don’t overdo it when it comes to discretionary spending, but do keep in mind that a little retail therapy can go a long way to maintaining a happy demeanour in life.