Anyone wanting to better manage their money
would be wise to determine what their financial priorities are and stick to
them. Of course, if you see that these priorities will not put food on the table
and pay your bills, then you will have to rethink your priorities.
Setting your priorities is simple. You just
decide what is the most important aspect of your finances and put that item on
top. However, if you decide on that stereo over your electric bill, you may find
yourself in the dark with no need for a stereo.
There are basic priorities that pertain to
everyone. These are simply a matter of survival. Here is a list of the basics:
- Water
- Food
- Shelter
That was a tough one.
What does it take to ensure that our basic
needs are met? The main ingredient is a source of income to pay the rent or
house payment, pay the utilities, and buy the groceries. This is where you start
setting your priorities.
Before you can spend another penny, you have to
take care of what you need to survive. Don't put off the rent or house payment,
utilities, and don't skimp on your groceries and necessary health items. If you
do, you will start experiencing money problems much sooner than you would if you
had delayed paying other bills instead.
What's next? If your source of income happens
to come from a job, then I would say your transportation. You have to get back
and forth to work so you can afford all of the other stuff. This would include
your vehicle payment, gas, insurance and maintenance. If your source of income
is not a job, then go to the next step.
And Now? Naturally, this would be your other
bills. You can even split this category a little further.
First, you have your bills that are secured by
property. You should always pay these bills first.
Secondly, your unsecured bills which are
probably credit cards.
The reason you should always pay your secured
bills first is that it is much more likely that they can take the secured
property and probably will unless payment is made. While credit cards companies
are notorious for their threats, they very seldom follow through. I'm not saying
not to pay them, just that they aren't as high a priority as your secured bills.
Next would be your savings. I really to hate to
list savings as your last priority because having a savings can prevent the use
of those dreaded credit cards and help in so many ways. If you have the money to
cover all of your other priorities, then you should always put savings at the
top of the list. However, if you don't have enough money to cover your bills and
expenses, then your savings will have to be the first to go.
Just to recap. The below list is an example of
what your financial priorities should look like:
1. Groceries and Necessary Health Items
2. Housing (Rent or House Payment)
3. Utilities
4. Transportation
5. Secured Bills
6. Unsecured Bills
7. Savings
Let's hope that you never get in the position
to have to decide which of the above list will have to wait. But if you do,
following the above priorities is absolutely necessary to ensure your survival.
