Budgeting 101: Get Your Priorities Straight (guest post)
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One of the things I am asked regularly is this: "What's the first thing I need to do to get going with a budget?" I almost always answer with this: "Get your priorities straight." Before you can even think about budgeting, controlling your spending and/or digging yourself out of a debt-hole, you need to figure out what's important to you and plan accordingly.
Priorities: wants and needs
One of the first things you have to figure out is the difference between wants and needs. This is actually harder than it sounds for some people. For instance, if you have available, convenient and reliable public transportation, you do not, in fact, need to drive your car to work everyday (and this will allow you to save money on gas). And, while you may need to wear clothes, it is not necessary to buy expensive designer duds. The list goes on. Basically, though, needs can be broken down into these items:
The first rule of priorities is that needs come before wants. When creating your budget, you need to make sure that there is enough money set aside to cover your obligations and your needs. After that, you should make sure there is money to make payments on debts and other obligations. (Note: You should never pay unsecured debt -- like credit cards -- before you make a mortgage payment. Always make sure your secured debt is taken care of first.) Then, if there is anything left over, it can be used for wants.
Priorities are important. Part of the reason we are in the mess we're in is due to the fact that we lost sight of our priorities at some point.
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J. Money's at a wedding, and will return tomorrow. He wishes you a very sexy day!
| Guest Post: Miranda Marquit writes for the AllBusiness Personal Finance Corner and Yielding Wealth, and believes in the sexy budget as well! Hope you likey, likey. |
One of the things I am asked regularly is this: "What's the first thing I need to do to get going with a budget?" I almost always answer with this: "Get your priorities straight." Before you can even think about budgeting, controlling your spending and/or digging yourself out of a debt-hole, you need to figure out what's important to you and plan accordingly.
Priorities: wants and needs
One of the first things you have to figure out is the difference between wants and needs. This is actually harder than it sounds for some people. For instance, if you have available, convenient and reliable public transportation, you do not, in fact, need to drive your car to work everyday (and this will allow you to save money on gas). And, while you may need to wear clothes, it is not necessary to buy expensive designer duds. The list goes on. Basically, though, needs can be broken down into these items:
- Shelter (rent/mortgage, utility bills not including TV and Internet)
- Food (not eating out)
- Clothing
- Transportation (if you have to commute to work)
- Preparation for the future (emergency fund, retirement account)
The first rule of priorities is that needs come before wants. When creating your budget, you need to make sure that there is enough money set aside to cover your obligations and your needs. After that, you should make sure there is money to make payments on debts and other obligations. (Note: You should never pay unsecured debt -- like credit cards -- before you make a mortgage payment. Always make sure your secured debt is taken care of first.) Then, if there is anything left over, it can be used for wants.
Priorities are important. Part of the reason we are in the mess we're in is due to the fact that we lost sight of our priorities at some point.
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J. Money's at a wedding, and will return tomorrow. He wishes you a very sexy day!
Labels: budgets, guest post
posted by J. Money at
7:35 AM
2 Comments:
Awesome, you use the word "duds" I thought I was the only person that still said that!
It is sad when I hear of people paying their credit cards while losing their home, they really need your lesson.
This was a great post! There is so much turbulence in the market today, and people need peace of mind more than ever. I wanted to offer your readers a link to another blogger who is doing great work. He writes about our 'childhood money messages' and how the best approach to stability in today's market is to resist letting these emotions control our buying/selling habits. It is really fascinating work, and something you should all check out. His name is Spencer Sherman, and you can view his blog at http://www.curemoneymadness.com/blog.
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