Monday, March 30, 2009

Prioritize Your Wants

Tip #107 - Prioritize Your Wants. When you are trying to save money, it’s easy to try not to spend money on fun things and then look at someone who is eating at fancy restaurants or going on big vacations and judge them for not being responsible with their money. But looks can be deceiving. When trying to save money, you do not want to deprive yourself of all things you like to do. But you cannot do it all. Therefore, you need to prioritize. What is most important to you? What is least? What is your budget for these fun activities?

If you have $100 per month to spend on what you want, you can buy a cup of coffee every day at a fancy coffee shop, and do nothing else. If you love fancy coffee and you enjoy drinking it at a café, then who am I to say that you are wasting your money? On the other hand, it would be downright wasteful to drink it out every day if you don’t even enjoy it that much. Your money can be spent better on something you do enjoy. So maybe a relaxing massage is more important to you than an everyday cup of coffee, so you spend $80 on that per month, while only drinking a cup of coffee at a café once per week. Or maybe you prefer fancy dinners so you spend your $100 to eat out at a fancy restaurant once a month. Or maybe travel is more important to you, so you save up the $100 per month and take a big vacation once per year with that money.

The point is, you can be responsible with your money and still do things you like. I think it’s important to write down how much money you have to “play” with for fun. Then prioritize your wants, and figure out much money you want to put toward each activity. You can use your money all on one purchase or activity or several small ones, based on your priorities. And then if someone gives you a look when he sees you eating out at the fancy French restaurant in town, you will know inside that you are there because you can afford to be there based on your priorities.

In Real Life – After all of our household expenses, kids’ expenses, and our savings, we have about $300 left per month that we can use for ourselves. Three hundred dollars per month sounds like a lot – this includes entertainment, vacations, dinners out and anything else that is not in our budget. If I were another person, I suppose I could easily spend $300 going to fancy restaurants and nights on the town each month. Or I could eat out more often at middle-of-the-road restaurants and get my hair done at a fancy salon. But I am neither of those people. While I do like a break from cooking, take-out burritos or Chinese food for relatively little money usually satisfies that need. What I do like to do, however, is travel. Without travel, I would not be as happy as I am. I love to experience different places, different cultures, and different geographic locations. And frankly, I love to just get away from it all. Oh, and I also like a break from the cold each year. So from our $300 per month, we put $200 of that toward travel. We generally take a trip to Florida each winter and to the beach each summer. And in between we often do a few weekend trips. The remaining $100 per month goes toward eating, entertainment, and any other miscellaneous activities.

For me, my priority for my leisure time and my discretionary money is travel. So that gets first dibs on our extra funds. Getting a break from cooking is probably secondary, and going out is probably last in my book. I am sometimes almost apologetic when I tell people we are going away yet again. But I shouldn’t be because I skip those Moms’ night outs and expensive restaurants to enjoy the activities that are important to me. You should prioritize your wants, too.

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