Factoring in all of the essentials you have in your life–for the most part, they all have a common thread—a need of resources to fund those essentials. Now I am not saying that all things are bought with money, but I am saying that the tool of money is a consideration and probably a big one when it comes to your home, food, clothing, transportation, and a number of other aspects in life.
So accepting this as a way of life in exchanging a monetary value with the essentials you have is a given. This being the case, how do you identify and prioritize the most important aspects of your personal finances?
So let’s outline this based on your current financial picture; from a baseline, you will have money that comes to you in the form of income, whether from an active or passive source, a government stipend, an insurance payout, an inheritance, or otherwise. You will also have expenses in the form of your cost of living. These will be expenses like feeding you or your family, putting fuel in your vehicle, and paying for insurance.
Now income or expenses are obvious whether we think much about what comes in and what goes back out.
But before, just write down where your income is coming from and where that money is going back out in the form of expenses.
Looking at this theme on what’s essential, it’s important to take a step back and look at a holistic approach to the categories we looked at, as this will help you merge these categories in order to have a broad understanding of your expenses.
Pulling from what is essential in your housing, transportation, clothing, and the like, gather what is actually essential to your lifestyle above the bare essentials like food, water, and sleep. Pulling this together will provide you with a baseline to start with.
Pulling together all of those essential aspects, which take a monetary exchange, will help you to prioritize your budget based upon what matters most to you.
This is how I would prioritize it; look at;
- Your Home: location, landscaping, furnishings
- Your Food: mix of dining in or dining out, quality of food, vitamins
- Your Clothing: mix or type of clothing, seasonality
- Your Transportation: type of transportation, replacement schedule
- Your Connectivity: type of technology, level of internet
- Your Subscriptions: which subscriptions add the most value and purpose in your life
- Your Healthcare: what insurance coverage, type of insurance
From this point, you will have some primary areas to budget from, which we will cover in the next blog.
CTA:
My call to action is to look at a holistic picture of your finances, starting with what matters most to you. Take a closer look at these three essential areas; then, we will take a closer look at incorporating these into your budget in the next blog.
