Millennials and Retirement
November 5, 2021
Financial Plans and Contributions to Make Before 2022 is Upon Us
December 17, 2021

How To Prioritize What’s Important In Your Budget

 

How To Prioritize What’s Important In Your Budget

Following a budget is essential to financial health, but it’s challenging for many people to create one and stick to it.

Learn how to prioritize your spending when creating your budget and how to adapt expert advice to your financial goals.

Why Budget?

Whether you’re working towards business, fitness, or financial goals, what matters most is creating a solid plan to get there. When it comes to meeting financial goals, your budget is one of the first building blocks of a sound financial plan.

Your budget shows how much income you’re bringing in and how much you plan to spend on different expenses. While you might not have much control over the inflow—household income—you can control the cash flowing out. Create your budget by recording, monitoring, and prioritizing your spending categories.

Ultimately, this will help you make financial decisions today that will help you meet tomorrow’s financial goals.

What Matters Most

When prioritizing spending goals, many families work towards building savings while paying off debt. First, build your emergency fund. This should include at least three months of essential living expenses.

Second, pay off unsecured debt such as credit card balances and unsecured credit lines. There are several different techniques for paying off debt, but the most efficient method is to pay the debt with the highest interest rates first, continuing until you’ve reached the debt with the lowest interest rate.

It’s also important to set aside money for other goals, like saving for your children’s education and retirement. A vacation, home renovation, or a new vehicle are also important goals for many people.

Your financial advisor can help you to prioritize these goals based on your current financial situation, age, and other factors.

Wondering where to find the money to build savings and pay off debt? Begin by tracking your spending.

Follow The Money

Once you’re ready to create your budget, begin by determining how much after-tax money flows in and out of your household. This gives you an overview of how well you’re meeting your fixed and variable expenses, and how much money you could earmark for your financial goals.

While recording your after-tax income from earnings, investments, or other income is simple, recording your cash outflows is more complicated.

You might have the best intentions to stick to your budget, but where does your money go?

For at least one week, track your spending using either a spending tracker app or old-fashioned paper and pencil. Identify the spending categories for every dollar flowing out of your accounts. This will show you when and where your spending occurs.

Are there any surprises? Where could you cut back on expenses?

Identify areas where you overspent, as well as opportunities to cut costs. If you’re unable to trim expenses to a satisfactory level, try balancing your budget by increasing your income. Could you generate a few dollars with a side hustle or gig-work?

Building a personalized household budget, prioritizing your spending categories, and crafting an actionable financial plan to help you meet your goals can put you on the road to financial success.

If you have questions, financial professionals are available to answer them and help you get started!

 
 
Call-4

Copyright © 2021 FMeX. All rights reserved. Distributed by Financial Media Exchange.

 

Learn more about prioritizing your budget for what's important:

Gift

Holiday Gift Strategies to Soothe Your Budget

The average American will spend just under a thousand dollars on holiday shopping. While some pay with cash, close to three-quarters will pay with a credit card. Research shows that consumers will spend up to twice as much money when they use credit cards instead of cash. If you’ve ever found yourself haunted by the ghosts of past holiday credit card bills, you aren’t alone. A quarter of those who used a credit card for their gift shopping haven’t repaid their bill nine months later. Here are four tips to help you avoid feeling like Ebenezer Scrooge, or Bob Cratchit.
Covid Spending

COVID Change How You Think About Spending?

The COVID-19 pandemic has reshaped our lives in unprecedented ways, forcing us to stay at home more, adjust our spending habits and even reevaluate our retirement hopes and dreams. In our quest to understand our relationship with money, we need to be careful that we don’t develop a fear of spending. To conquer this unhealthy fear, align your spending with what you value. Here are four simple steps to help you align your spending with your values.
financial independence

Four Tips for Gaining Financial Independence

July 4th we celebrated our country’s history of declaring independence and guaranteeing basic human freedoms. But true freedom requires financial independence, as well. Self-sufficiency isn’t guaranteed, but every one of us has the opportunity to achieve it. Check out these four steps to achieve financial independence.
spending saving

Saving and Spending Habits

Personal debt is a persistent and growing problem. In fact, total debt numbers hit record highs this year. More Americans are flat-out broke. They are overspending money they don’t have with little to no savings. And it all comes down to personal choices and habits… These appear to be largely to blame for the situation more and more smart people find themselves in every day.