This is the third post in our series about turning your finances around. New here? Start at the beginning!
So you think you know what your goals and priorities are… I hope you’re right. Unfortunately, I have a feeling you’re wrong about what your priorities really are. Why?
You Don’t Put Your Money Where Your Mouth Is
Ok… I hope you don’t eat your money. That is gross. Do you know where your money has been? Second, it is a waste of money! Back to the point…
Take a good hard look at where you’ve spent your money since we first discussed the idea of tracking your money. Where are you spending the majority of your money? Is it on dining out every day of the week? How about paying off debt for things you’ve done in the past but have nothing to show for it now?
Regardless of what your biggest spending category is, it says something huge about you.
Where You Spend Your Money Shows You What Your True Priorities Are
Take a minute and let that sink in. Your true priorities are where you spend your money! You might be offended by the thought that your biggest priority is “owning”, maintaining, insuring and traveling in two gas guzzling cars or that the most important thing in your life is eating at fancy restaurants.
Another common financial priority is living in an over-sized house that has been decorated lavishly. Mortgages or rent will take up a large part of your income, but they don’t always have to be your number one spending category!
We have a decent sized mortgage payment, but we actually save more for retirement each month than we pay for our mortgage. It is possible.
What is your number one priority according to your spending? Share in the comments below!
The Order Of Your Spending Categories
Another eye opening exercise is to look at the order of your spending categories from the highest percentage of total expenses to the lowest percentage of total expenses. It might be shocking to see that your lavish vacations are more important than your child’s after school activities that you say you can’t afford.
There are some categories that are normally going to be at the top of your list, such as your mortgage or rent payments. However, you can make changes to put your spending categories in whatever order you want.
For example if you have a paid off house and car plus you have a reasonable grocery budget, you can set up your spending categories in the order that matches your true priorities. But is your previous spending that you’ve been tracking in line with those priorities? That’s the real question.
What If Your Money Priorities and Real Priorities Don’t Line Up?
Don’t worry, you aren’t alone if your money priorities and your real priorities don’t line up. It is more common than you’d think and can be fixed with a bit of effort. That’s exactly what I’ll be focusing on next week! Be sure to check back and continue along the journey of turning your finances around!
What is your biggest priority according to your spending that you’ve been tracking? What did you say was your biggest priority? How do you plan to change that?
I have to give credit where it is due. This post was inspired by Jacob at iHeartBudgets.net!