There’s a huge tug-o-war right now between living your “rich life” (prioritizing the things that make you happy) and your “practical life” (prioritizing the things that will make your future secure). It seems that both sides are yelling at each other and yelling at you to decide your FATE! What’s hilarious is that, in all honesty, they’re both fighting for the same thing. Both want you to build wealth for yourself and both want you to be happy and secure. However, the only problem you could run into is going too far in either direction. If you’re not balanced in your money plan and you swing wildly to one side or the other, it will lead to frustration and possible reckless spending. Your money plan needs balance to survive.
How can I balance my needs and wants while prioritizing my goals?
It really comes down to what your personal financial goals are. Do you want to be completely secure later on in life and you don’t mind reducing some of your “wants / joys” temporarily to get there? Go for it! Reduce your “wants” to supply more of your “needs”. Get rid of the daily stop at the coffee shop and save that money. Do you instead want more “wants / joys” today? Go for it! Reduce your “needs” to supply more of your “wants”. Downsize to modest living or trade in your car for something used and reliable. It’s okay to shift your needs and wants around as long as you don’t jeopardize your goals. Responsibility and joy can learn to co-exist!
What about non-negotiables?
Non-negotiables are things you must identify early on. They are the things you won’t budge on and would rather live in your parent’s basement than give them up. Non-negotiables could be things like giving to a specific charity, taking a week-long vacation once a year, visiting a certain place for the holidays, having pets, etc., etc. They are very personal things and must be identified early on, especially if you’re in a marriage, to ensure that they are addressed. Many times they could trump certain needs and wants. They are the wild cards in your money plan.
Prioritize your goals with a few steps!
- Write down all your financial goals and non-negotiables.
- Where do you want to be financially in 1 year, 5 years, 10 years?
- Take another sheet of paper and make 4 columns. Label the columns: INCOME | SAVINGS | NEEDS | WANTS.
- Fill each column with how you’re currently living. The more details the better.
- What’s your monthly income?
- How much are you saving each month?
- What are your monthly bills and expenses?
- What are your monthly wants?
- Tally up how much you’re receiving or spending in each column.
- Assess those totals against your financial goals.
- Are you making enough to support the life you’re trying to live (without relying on loans or credit cards)?
- Does the amount you’re saving put you on track to reach your future goals?
- Are your needs too high?
- Bills too high?
- High mortgage?
- Expensive car payment?
- Are your wants too high?
- Eating out a lot?
- Splurging on expensive clothes?
- Travel and holidays are always charged to a credit card?
- Adjust the items in your columns so they are on track for your goals.
- Start a side hustle if you need more income.
- Prioritize savings to create an Emergency Fund or start investing.
- Reduce some of your bills by downsizing.
- Reduce some of your wants by eliminating or reducing things that aren’t that important.
Money plans are personal and you can get super creative with them, but you have to know what your goals and non-negotiables are FIRST. We don’t want a plan where we are counting pennies like counting calories – it will never last! We also don’t want a plan that depletes your hard earned money on things you’ll forget about in 6 months.
Turn your financial goals into a reality by prioritizing your life and creating financial stability.
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