Loading

wait a moment

How to Set Priorities in Your Spending Plan

It’s hard to save money when you always lose it spending a lot both for your personal and family expenses. I’m not saying that it’s wrong to spend but you need to set priorities in order for you to achieve your financial goals.

Identify the  priorities in your spending plan and label them as to how they are important for you. Lending money to friends should not be labeled low but long term care insurance is of high priority.

Any type of insurance is a must to be included in your spending or financial plan given that it benefits your personal life and the lives of your family. Car insurance when you’re prone to accident give you confidence to drive in any places you want (Remember to get a license!).

How to budget your money if you have an irregular income? It’s easy to set priorities when you do have a regular home but how this is possible for workers with irregularity in their salaries.

There’s a simple answer to these questions. You need only to add your yearly income then divide it by twelve. You’ll get your monthly income result and start to setting priorities for spending.

What if your income is irregular? The first thing you need to do is to calculate your monthly income by dividing your yearly income by 12.

Next is you list your monthly expenses. It is effective if you track even your little or penny expenses so you can compute for your savings even during the preparation of your financial plan.

Label each of your expenses according to their importance. Number them from 1 to 5. For instance, you can put “1” besides the expense that you prioritize most such as food, housing and electricity bills. The rest of the expenses should be labeled from “2” to “5”.

You can also note each expense as to the reason why make it as your low or high priority.

Set the money aside for your most important items in the listed. If you run out of money, stop on the expense where you should pay. Commonly, those expenses are your wants – making big purchases – buying set of clothes, gadgets, etc.

Include savings in your spending plan such as the fund for your retirement and education for kids. You need to figure out things that are vital in the future. Another thing is your medical fun – emergency fund. There are scenarios wherein you need to get some money from your emergency fund to pay such necessary expenses.

Car and home repairs are some other things you need to save money for.  Given that you don’t know when will this fund may happen, yous should put some money set aside for these funds. This is also to protect yourself in case you lose your job.

Your next priority is to pay off your debts. There are two principles/theories involved in paying debts. One is the debt stacking which you prioritize highest-interest debt. On the other hand, debt snowball, another term that refers to paying your debts first with low-interest rates.No matter what you choose to apply, the best thing is that you pay off the balance.

As you go alon g with listing your most important expenses, you have to determine whether or not you are also keeping track your financial goals. Part of it is your savings. Save money and invest on something that would benefits you through profits.

One last tip that I’d like to share to you for you to save more money is apply the social cost of investment. This refers to resisting any invitations from your friends or colleagues to dine out in a pricey restaurant or buy an expensive coffee.

It require s discipline but it’s not necessary to always resist their invitation as long you know that you’ll not waste all of your money in a single use.

Spending plan helps you utilize your most important resources – money that enables you to reach out or achieve your financial goals. The more you practice it, the more you become knowledgeable on your financial plan, making it your hobby or part of your daily activities.