Thursday, May 21, 2009

Take Care Of The Big Picture

Saving Money Tip #143 - Take Care Of The Big Picture. I’ve been thinking about yesterday’s post about not getting upset with the little things that aren’t perfect in your budget. And to expand on that thought I realize that you don’t need to get upset over the little things if you have taken care of the big things. And while I do believe the little things are important to your finances – eating dinners at home instead of eating out all of the time or reading books at the library rather than buying them – in general, the big things are more important. When it comes to finances, take care of the big things and you won't care about the little things.

So what is the big picture? Taxes, a home, food, health insurance, basic utilities, a car (possibly), saving for retirement, and maybe saving for college for your children. Each person's list will be slightly different. Regardless, once those big things are taken care of, you can spend the rest of your money however you want. So if you have your housing and food payment covered and you pay your taxes, insurance, and utility bills, and you put money away each month toward retirement then the big stuff is covered. You are free to do whatever you want with the rest of the money on little things. Maybe you want to go on vacation or eat out occasionally. Maybe you have a hobby you want to partake in. The beauty of taking care of the big things is that you can do whatever you want with what is left. So there is no need to feel worried if you can afford an expensive ski trip, eat out to a fancy restaurant, or join a swim club. If you have money left to do it, then do it.

The best way to do this is to take your monthly income and pay the big expenses first – taxes, health insurance, retirement, housing payment, and utilities. If you are saving for your child’s college, then put that away as well as well as any other necessity. Whatever is left is yours for the little things - to do with it what you want, guilt-free and worry-free.

In Real Life (IRL) – When I was single and worked (actually I mean when I worked and got paid for it), I got paid twice a month. Taxes were taken out from each paycheck automatically as was health insurance and money toward my 401(k) retirement plan. On my own, I also sent a check out to a mutual fund company on the first day of the month for a future down payment on a house as well as an emergency fund. Then I took care of my big bills one by one – rent, utilities, etc. After that was done, I did as I pleased. Some weeks I went out to eat, to shows, to sporting events, or clubs. Other times I went away for the weekend.

I didn’t worry about what would probably appear to an outsider as frivolous spending. Why? Because the big stuff was done. The main bills were being paid and the savings was coming out of my paycheck automatically or regularly. The rest was mine to do as I pleased. Because the big things were taken care of, I wasn’t spending my days wondering how I would put food on the table and I wasn’t lying awake at night worried if I would be able to retire. Taking care of the big things allowed me to not worry about the little things.


Herbalife Las Vegas said...

I agree the big things are more important than the little things, but both things matter.

Emmett said...

Pay the big things first, good idea.