How to define your financial priorities
06 Mar 2023
2 minute read
These days, most people have some sort of budget in place. But with the current cost of living (😳), perhaps your current budget isn’t really working out how you had planned. The economy is changing, and that means, your expenses probably should as well. Ultimately, it’s necessary to figure out what is a top priority for you to spend, and save, your money on. To make things easier, we’ve put together 3 steps to get you started on defining your financial priorities.
Step 1: Review your spending
It’s something people like to avoid, especially after a jampacked weekend 😉. However, reviewing your spending is one of the best places to start.
1. Look at your average spending over the last 90 days.
2. Recognise the top three non-essential areas where you spent your money.
Getting into a habit of this every few months is an effective way to help reflect on your financial decisions and hold yourself accountable. Additionally, it can help identify the main areas you like to splurge on. By identifying this, you can make small adjustments to your budget to allow yourself to still enjoy these things, but in moderation – and within your means!
Step 2: Understand your needs/wants
Let’s be clear: a need is something you must have; something that you need in order to survive. A want is something that you can live without but is going to add value to your life. Write a list of all the needs and wants in your life, specific to you, and then order them from most to least important. This way, you can clearly look at your list and ask yourself, “how urgently do I need this?”. During this task, be honest with yourself. Don’t feel guilty about the things you enjoy. In order to have a healthy life balance, the things you enjoy should be a priority...in moderation 👏.
Step 3: Compare short-term/long-term goals
Not to be annoying, but the simplest way to understand your financial priorities is to have a clear idea of your current financial goal. Are you saving towards a car? A house deposit? An overseas trip? What is achievable in the short term and what do you want for the long term? Check back in with this every few months to ensure your budget, goals and financial priorities are all aligned 🙌.