Last week, we discussed some pretty abstract concepts, so I wanted to dive into how I go about determining my priorities. I always find it easier to take an abstract concept and break it down into more manageable pieces.
So, here is how I breakdown about my priorities:
Lifestyle Priorities
I know, this seems pretty broad, but let me explain. These are the lifestyle choices that I have talked about in the past. This is how you want to live your life now.
Personally, I want to make sure no matter how I budget, I want to not feel restricted that I can’t go out with friends to have a drink or try a new restaurant. So, as I go about the process of setting up my budget, I make sure to include at least a little portion of my funds towards this.
Short Term Savings
We have all had those days, it could be coming out to your car and it not starting or having a ticket on your windshield. When you get home, and all you want to do is watch Netflix, but then your computer won’t turn on. These situations are so stressful!
This bucket is where I like to put things away for those expenses that come up unexpectedly. These things are usually very stressful, so I like to try and have a reserve in place to help manage this stress.
This amount may not be something that you always have in your budget, but it’s good to start and set out a set amount and get to that point before removing this from your budget all together.
Long Term Savings
This bucket is all about the future. Now I know, I said in the last post that when you are budgeting you should focus on your current situation. However, that said, it’s never too early to start thinking about saving for your future.
In this specific bucket, I mainly account for things like retirement and similar expenses. It may be my CPA or Type A anxiety that makes me worry about what is going to happen after I stop working, but I have made sure putting at least something into a retirement account is something I always do.
P.S. I will do another post of retirement soon!
Special Projects/Fun Stuff
So, you could probably guess from the title of this section, but this is where you get to start working towards some dreams. This could be a European vacation or saving for your dream car. How exciting would either of these be?
For me, I have a dream of being a homeowner. And as you may have guessed, living in LA that seems like an impossible thing to reach. So, I am starting to save up now for a down payment, and while I don’t have a set amount in mind I still want to make sure it is something I am working towards now.
WE DID IT! Congratulations, you have taken the first steps towards creating a budget. Did you think it was possible? I hope that you have found the past series to be a helpful guide to help you started on your budgeting journey!
Comment below and let me know how far you have made it on your budget. And don’t forget to follow me on Instagram for more tips!
