Knowing Your Financial Priorities

Do you have money goals? Most people do. Or at least have something they hope to achieve one day like buying a house, a new car, or going on that bucket list trip. However, the bigger question is if you are keeping track? We are always looking for ways to help you save more money so you don’t need to depend on payday loans, or at least only need to when you’re in a crunch. Ask yourself what you’re willing to do to put your financial future first. Yes, life happens, expenses pop up and you can’t plan for everything financially, but it’s easy to completely spiral out of control and lose track of your spending and where your money is going. So how do you keep track of your finances?

Take a look at your budget you have in place, if you even have one yet, and look at what your savings account looks like. If you are prepared for a financial emergency, do you feel confident with your finances? Everyone has their own way of how they like to manage their money, and prioritizing the things that are important to you (but also the necessities) is one of the reasons we’re here writing this article. So keep reading for some of our tips to help you identify and track your financial priorities.

First off, let’s talk about determining if you need a lesson in money. Read through some of the below and ask yourself if these are some of the problems you face when it comes to your finances.

You have gone over budget

What is one key indicator that you may need a lesson in money? You are going way over budget and struggling to make ends meet despite knowing you have a steady income coming in. We talk a lot about budgeting here at GoDay, and it’s because it’s one of the most important things you can make and follow to stay on top of your finances and have the means you need to pay for those priorities in your life.

A money tracking system or budget will help you know matter what your financial priorities are. Spending money can be easier than saving money, we all know that. But if you are able to identify where you’ve gone over budget, what you’re overspending on, etc. then you’ll be able to have better control over how you can save.

When it comes to creating your budget, and game plan, you want to make sure you are keeping track of all the money that is coming in and what money is going out. This can be overwhelming for people and often the reason people don’t stick to or have budgets. But there are a ton of (free) tools out there to help you stay on track and eliminate the burden of keeping all your receipts and trying to pour over a spreadsheet. 

Are you prepared for an emergency?

What happens if your basement floods unexpectedly? Someone ends up in the hospital and you don’t have health insurance? You get in a car accident? You get laid off from your job? You need to fly out because a family member is sick? The list goes on of unexpected emergencies that can happen. It’s life. You can’t predict when something is going to happen, but you can be ready for it if and when it does. Having an emergency fund in place is part of being responsible with your finances. This is more than just a savings account. This should sit separate and not ever be touched until you absolutely need it. It should be ready for if the unexpected happens.

How do you start to prepare an emergency fund? Financial advisors recommend that your emergency fund cover at least three months of living expenses. Don’t stress, you can start to build your emergency fund over a time frame that works for you, but don’t put it off, and don’t drag it out, because again, you don’t know when an emergency can occur. Emergency funds can actually help alleviate stress in the long-term when it comes to finances as you’re not always walking on your tiptoes hoping and wishing nothing happens to you that will require cash to be in the bank. 

Curious about how much you should have in your emergency fund?
RBC has a tool to determine how much you should have saved in case of an emergency based on your current salary.

How are you making spending decisions?

Your budget will play a huge role in identifying how you are making spending decisions and where the opportunities are to save and cut back. When it comes to your financial situation there are the things we have to pay for – like bills, rent, mortgage, car, the list goes on. These expenses aren’t going to disappear and are a priority. But do you have all of those payments planned out? Do you know when those bills come in and when they’re due? Having an idea of the schedule of your bills will help ensure you have the savings you need to pay each one of them to avoid interest and late fees

On top of those expenses, you have your everyday expenses. These are the ones we often lose track of the most. That morning coffee you grab at Starbucks. Your lunch everyday at work. That cute new scarf you wanted for fall. These can really put you in a financial pinch quick, and add up. This is where it’s important to identify your  financial wants and financial needs and work that into your budget. By tracking your budget, you’ll be able to easily see where you’re being irresponsible with your money and how you can improve.

Are you spending money you don’t have?

Credit cards can be both a blessing and a curse, and there are so many people out there that just don’t know how to use them responsibly. It’s easy to rack up credit card debt, and since they often have a hefty interest on them, it’s going to feel like you’re drowning and can’t get out of the deep hole you buried yourself in from overspending more money than you have coming in.

Along with credit cards, there are lines of credit, and other examples of spending money that you don’t physically have or need to pay back. If you are someone that often finds yourself not being able to pay off your credit card, see if there is an option to change everything over to cash, or debit versus even using your credit card at all. Leave your credit card at home when you leave the house so you’re not tempted, and really kick the bad habit of charging everything on your credit card to rest.

When it comes to your finances, you all have particular obligations and responsibilities. It can be a lot of pressure to pay all your bills, but also still have extra money to live the life you want. How do you learn to prioritize without ending up with nothing in your savings? Here are some things to walk you through it.

Understand your finances

No matter what your age, or financial position, we all have bills to pay. Our responsibilities financially change at different stages in our lives, from schooling, to kids, to retirement, and you need to stay on top of your financial obligations no matter what stage in your life you are at. How do you do this? Well understanding your finances is the first step. This is where your budget comes in, but another way to get started on this is making a list of everything you’re spending money on and ranking them by importance. Ask yourself: do you really need the things that fall on the bottom of your list? Could you live without them?

Start saving and stop spending

The financial responsibilities you have should always be a priority. So where do you start? First off, what are you saving for? Or what should you be saving for. Then from there, look at your best options and your savings goals, and set aside a reasonable amount in your budget you can contribute consistently. You can be saving for all sorts of things, and a mix match of the below at one time: 

  • Retirement
  • Emergency Fund
  • Schooling
  • A new car
  • A house
  • The trip of a lifetime 
  • Debt/student loan (paying it off) 

Look at your financial goals, and plan a road map to get yourself there. Often we look at a huge expense of chunk of money and think there’s no way to save that much, but a little bit each paycheck can add up and go a long way.

With saving it can be challenging and daunting because you feel like you’re being torn so many ways. How do I save for my kids’ college but also for my retirement, and also the new car we’re going to have to buy when ours breaks on, etc. etc. We found these great tips from FinancialPlanningForCanadians.ca that we think you’ll find helpful to prioritize what you need to save for:

  1. Weigh the trade-offs: Know what’s important to you—and where you have flexibility. For example, you may feel that a semi-annual vacation is a must for your mental health, but you’re willing to brown bag your lunch every day.
  2. Don’t wait: Don’t put off taking a good look at your financial priorities. If you need to make changes, it’s better to find out now so that you have time to take action.
  3. Clarity is key: Be crystal clear in communicating your goals to your planner and ask questions to make sure you’re on the same page about how you’re going to reach them.
  4. Think long-term: Live for today—but don’t forget about the future. You don’t want to be financially compromised later in life because of choices you make now.
  5. Reassess regularly: Revisit your priorities—and your plan—at least once a year to be sure you’re on track.
  6. Stay the course: Commit to your plan and trust that you’re getting ever closer to the lifestyle you want.

Stay on track

As mentioned above, after you have an idea of your financial goals and how to attain them, being able to keep your finances in check is what’s going to keep you on track. There are so many ways to do this, whether it’s an old school journal, spreadsheet, or a tool like an app or website that keeps you on top of things. Find what is easiest for you so you actually hold yourself to it.

Prioritizing your spending and money habits is critical in making sure you stay on top of your budget, your savings goals, and also, you’re still living the life you want to lead without the financial burden or stress.

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