How Do You Spend Your Money?

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Personal finance is a simple subject and a complicated one. Obviously there are some basics that everyone should try to apply in their financial lives. Create a budget so you know where your money is going, live within your means, have an emergency fund, and saving for the future are just a few that immediately come to mind.

I love to talk about budgets because I firmly believe that everyone needs one. Some people are resistant to the idea of a budget because they think of it as something that stops them from spending on things they want. That’s the wrong way to look at a budget though. A budget is a good way to manage your finances so that you have money to direct towards the things important in your life.

What’s Important To You?

Here is where the personal part of personal finance comes into play. What is important to you financially? You need to think about this in regards to your current budget and also your future financial goals.

I’ll use myself as an example. For the short-term, in my current monthly budget, I am focused on paying down my debt. Despite this debt payoff push, I make sure to have a category for restaurants and also a category for entertainment because this is important to me. I enjoy eating out at restaurants with friends and family. Obviously I’ve not been able to do this much over the last year but now that Covid restrictions are loosening up and many of us are vaccinated, I’m looking forward to catching up with friends again at restaurants.

I also budget a small amount each month for entertainment because I know it’s unreasonable to not allow for any fun in my life. My entertainment money might be used on a Starbucks drink while I’m window-shopping at my favorite bookstore, or a movie, or picking up a small household item for my condo.

For my longer-term financial goals I also need to look at what’s important to me. As I mentioned earlier, my main financial goal now is to pay down debt. I don’t think anyone wants to have debt, I know I don’t. Some people might decide to throw every single extra penny at their debt. I thought about that but I also have other priorities now that both my kids live in other cities. Making sure I have the funds to take some long weekends to go visit them occasionally is important to me now.  I may even want to schedule some small vacations for myself, perhaps a writing retreat.

What Do You Spend Your Money On?

What’s important to you? 

Are you prioritizing your health this year? If so, maybe you spend your money on organic food or an expensive gym membership. 

Traveling for my kids’ lacrosse tournaments used to be one of my financial priorities. I know I have friends that are currently in this phase for both competitive baseball and swimming.

Is travel your priority? I know I have some friends that take frequent small trips. Some take extravagant larger trips. A few friends always seem to be on vacation. I don’t know how they do it since most people have limited vacation time and funds but good for them! I’ve gone a long time without a real vacation and I definitely want to change that in the near future. I may not have the money yet to take an expensive, fancy vacation but I could definitely budgets for a couple small ones.

How about home renovations? I think when Covid-19 hit last year there seemed to be a couple different scenarios that played out. Some people looked around (as they found themselves stuck in the house for a longer period of time then they were previously used to) and decided they really didn’t like their surroundings and they threw their house on the market. Others decided maybe they could just renovate, update, or redecorate their homes. Their money went towards this.

Your Money, Your Choice

Get the drift? It’s your money and your choice about how you spend it. Don’t let other people tell you what to spend your money on (unless it’s something unhealthy or dangerous-then you should listen to them!). Figure out your priorities and then create a budget that lets you spend your money on those things most important to you.

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