Debt

4 Simple Ways To Manage Your Financial Priorities

financial priorities

Financial Priorities Will Dictate What Your Life Will Look Like

Here’s the thing, not many people are ready to hear the truth that their financial priorities suck.

It’s a conversation that can turn ugly fast because there’s always a reason as to why someone has no money.

Not many people own up to spending money frivolously in the midst of barely keeping the electricity going.

There are so many things we need to save for retirement, kid’s education, emergency savings, renovations, holidays etc.

Oh, and another thing, we’ve all made excuses, even myself and I’m not proud of them but I’ve learned from them.

Average Debt In Canada 2019

According to Equifax,” the average debt per Canadian consumer (including mortgages) reached $71,300 in the first quarter of 2019, an increase of 2.6 percent over the same period last year.”

Debt (excluding mortgages) & Delinquency Rates

Age Average Debt
(Q1 2019)
Average Debt Change

Year-over-Year
(Q1 2019 vs. Q1 2018)

Delinquency Rate
(Q1 2019)
Delinquency Rate Change

Year-over-Year
(Q1 2019 vs. Q1 2018)

18-25 $8,677 2.2% 1.68% 0.1%
26-35 $18,062 2.4% 1.61% 3.4%
36-45 $28,506 3.1% 1.28% 2.8%
46-55 $35,527 4.2% 0.94% 2.2%
56-65 $29,873 3.9% 0.84% 3.4%
65+ $16,288 4.2% 0.99% 9.4%
Canada $23,496 3.2% 1.12% 3.5%

I couldn’t imagine being $35,527 in debt while I’m in my 40’s while still paying off a mortgage and paying into my retirement savings.

Setting Our Financial Priorities Early

When I bought my first house my financial priorities were to have emergency savings and to be free of debt.

I lived up to that deal I made with myself and by the age of 40, my wife and I had a mortgage-free house and zero debt. Why?

We set priorities for ourselves that included savings, investments and enjoying our day to day life as a couple.

It’s what we like to call a “balanced life portfolio” that we feel is critical to financial success.

What that means is that we don’t just save for one thing we put a little in each category to balance our needs.

For example, when we were paying our house off we also invested money in our retirement even though it wasn’t as much as we would have liked.

Our first financial priority was to pay off our mortgage as fast as we could as a safety net for our family.

Once that was done we amped up our retirement savings and caught up with that but at the same time, we built our emergency savings.

Frugal Obligations

Buying clothing and other needs were mostly purchased from second-hand stores or we picked up for free.

No big deal, we survived.

It also took many years of being frugal, using cashback systems, rewards programs, coupons and not eating out at restaurants.

I can tell you with certainty that we did not feel deprived.

Do we eat out now? Sometimes but not often because we like to cook at home.

There’s not much that excites us about spending $150 at The Keg for a dinner I can make at home for $50.

Also, there are things you can do as a couple that won’t cost you money such as going for long walks, coffee dates, special dinner eating in, movie night, etc.

What does it mean to have Financial priorities?

Ok, so imagine you were homeless and had nothing and someone gave you $100.

At that moment what would be your priority?

Likely to get something to eat if you had no resources to get free food.

If you did have somewhere that offered you free food such as a food bank or soup kitchen you wouldn’t go buy food.

What would you think your financial priorities would be if you were homeless?

  1. Will I need items to keep me warm or protected that I can’t get for free?
  2. Do I have enough food?
  3. Should I purchase any toiletries or medicine that I can’t get for free from a shelter or food bank?
  4. If I can get what I need for free what should I do with the money that I have?
  5. Where do I want to go from here?

If you were to prioritize your needs as a homeless person you’d hang on to the money and save it for future needs.

Unless of course, you needed any of the above to make your current situation livable.

I watched a YouTube video where a homeless man was given $100 and the first thing he did was buy clothes for himself and food for his other buddies.

At that moment those were his financial priorities where he fulfilled his needs and made sure his friends had a full tummy.

There were no outrageous purchases just basic needs and compassion for those in the same position.

Sadly, today’s society thrives on marketing from all medias and “wants” surpass “needs” even when the bills are piling up.

Downfalls of Making Financial Excuses

Source

Waiting until your bank account sits at $0 and you are living pay to pay to set financial priorities is a big mistake.

As humans, we need to remember that priorities are what keeps us going or pushes us to the ground.

If we continue to believe there will be an ample supply of money coming in we will fail.

Anything can happen at any time with our employment, relationships and our health.

Let’s look at some financial priorities that are mixed up in my opinion.

  1. Buying healthy food at the grocery store is too expensive. I can’t afford to grocery shop so I buy processed food instead. However, I don’t mind going out for fast food, dinner dates or using fast food delivery services.
  2. I can’t afford to pay the bills yet I have the latest smartphone with a data plan.
  3. No time to work out or go to the gym yet I can hang out on social media or watch Netflix nightly. (Health)
  4. Investing in upgrading my education to get a better job is too expensive. I love those new $200 Prada shoes and buy them. Going on holiday is more important.
  5. I can’t afford to buy new shoes or clothing for myself or kids but a night out drinking is no problem.

The truth is, these are all excuses as to why people are still in debt.

If you want something bad enough whether it’s to start your home business, lose weight or to make sure your bills are paid on time then you set priorities.

How To Create A List Of  Financial Priorities

If I’m being honest, lots of people make excuses about their finances and that is why they aren’t reaching their goals.

Not saving for retirement yet jetting off on holidays every year might not be the best choice.

However, at the moment you might be happy to enjoy your adventure but when you retire it might be a different story.

What it all boils down to is managing your financial priorities in a way that suits your present and future needs.

When we say something will probably happen it likely will but when we say possibly it means likely not.

Number one Priority on the agenda, write it all down.

By writing down (not on the computer or your phone) you feel a sense of commitment to your priorities.

Hang them up somewhere you can see them so you visit them often to remind yourself where you want to be in 5, 10 or 20 years.

1. Stop Waiting

The longer you push your financial priorities behind the further you will get.

Talk to a financial planner right away so they understand your situation and can guide you in the right direction.

An hour or two of your day to sit with a planner will make a lifetime of difference to you and it won’t cost you a thing.

2. Know Your Limits

The only way to know how much money you can spend every month is to use a budget.

If you haven’t taken the time to invest in your finances now is the time to create a budget.

A budget is easy to fill in once you have all of your numbers and will set you free from financial stress.

The idea of a budget is that it paints a picture of your financial health so you know your limits.

For example, if you can only afford $300 a month on groceries you know your limit is $300.

If you go over that limit the money has to come from somewhere.

The last thing you want to do is pay for your groceries with money that is supposed to pay for your electricity bill.

These are called priorities so if you’ve spent your limit, leave it at that.

3. Create Financial Goals

You’ve probably heard this question a million times, but where do you see yourself in 5 years?

If you set up a plan of action whether you live alone or have a partner it’s a stepping stone to achieve greater milestones.

For example, if your goal for the year is to pay an extra $2000 on your mortgage which means you need to save an extra $166 a month you both need to work at saving that.

You might split the amount in half and each finds a way to save the extra money or both work on cutting down expenses to reach this goal.

Another example is Mrs. CBB and I both gave up smoking not only for the benefit of our health but because we were spending thousands of dollars every year.

That money went to pay down our mortgage and you can bet it feels damn good.

Whatever you do it’s a process that needs to be done all year until you have that extra $2000 in your bank account.

There may be other goals you want to reach by the end of the year or even monthly which you can set at your own pace.

4. Commit To Your Priorities

The number one reason people fail at setting financial priorities is excuses and a lack of commitment to the overall picture.

It’s so easy in the moment to give up and splurge on a $250 belt or not cook dinner and go out and spend $100 at a restaurant.

The problem with this is that for many people it’s just not once a month it’s many times a month which is a problem.

Once you set your financial priorities, stick to them because if you don’t the only person you are cheating is yourself.

If you want something bad enough you’ll get it but if not, don’t complain that you don’t have money to pay for things that you need.

Discussion: What excuses have you made where you’ve spent money instead of saving it? (We’ve all done it)

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2 Comments

  1. The kiddies. They’re older now, but giving into every whim is easy. It’s also a great way to pick away at your savings. And then getting back on track is a special kinda hell.

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