102: Your Priorities

Now it’s time to assess your priorities, goals and values.

Before I get into goals and values, I want to touch on the items that EVERY budget MUST have in order to function properly (these should be included in your personal PRIORITES):

1. Pay yourself first – you must SAVE at least 10% of your net income (after tax). This 10% includes an Emergency Account and Long-term (retirement) Savings.  This does NOT include ‘saving’ for a vacation or the latest techno-toy. That’s considered “Planned Spending”
2. Eliminate Debt
3. Put a roof over your head
4. Put food in your stomach

That’s pretty much it! The other aspects of your budget will fluctuate depending on your situation.

Alright, now we can talk GOAL and VALUES.

While it’s all well and good to create the budget and call it day, there are no real motivating factors behind the budget to keep you committed to maintaining it. This is where your GOALS & VALUES come into play.

Sit down and start to think about some goals you would like to achieve in the next year, next five years, ten years etc. Maybe you want to pay off student loans and consumer debt. Maybe you want to buy a home. Maybe you want to start your own business. Maybe you want to retire at age 35. Maybe you want to travel the world. Maybe you have kids and want to save for their education. Whatever you goals, write them all down.

Values are also an important driving factor. For example, maybe you’re committed to donating 10% of your income to charitable causes. Assess the things in your life that you’re passionate about and hold real value for you. Again, write it all down.

Now that you have a healthy list of Goals and Values, you’re now more likely to stay committed to your new budget because you have unique motivating factors that will help keep you on track.

Next lesson – 103: Finding Balance