We receive a certain amount of money as income every month. There are lots of things the money is to be used for.
Do we need to prioritize what we do with the money? Yes we do! How should we then prioritize the use of these dollars?
May I suggest:
– Spending – Obligations, debts, discretionary, etc.
A number of years ago I read a book by Ron Blue, founder of Ronald Blue & Company, in which he suggested these priorities.
Why prioritize in this order? Why isn’t spending the top priority? If it was, would the other three categories be given the consideration they deserve, or better yet, the consideration they require? Most likely the other three areas would be shorted, especially giving and saving.
Giving/Charity – This has to do with putting others first. This could be your church or missions, it could be national charities, it could be local outreaches or services, or people in need. If you believe that everything you have comes from God and that God comes first then you give back to God first. If you place importance on looking beyond yourself you may be motivated to meet the needs of others. There may be causes that are close to your heart.
Saving – For what should be obvious reasons, we should be striving to spend less than we earn. So if we save before we spend we guarantee that there is always something set aside. An emergency fund should be considered a “must have” if at all possible. Stuff happens, after all. Pay yourself first, as is so often said. Regularly set aside what is necessary to meet your goals.
Taxes/Government – Because we have to. The impact of taxes and other government related deductions should not be ignored. We tend to think in terms of gross salary or compensation, but the government’s share is significant since there is normally a federal and a state component. If we don’t meet this obligation properly there will be penalties. Fortunately, or unfortunately, this obligation is usually met automatically and right off the top. Our starting points for the other three areas come after the adjustment for government, and the percentage reduction can be significant.
Spending – This is what happens with the bulk of our money. There are bills to pay and more bills to pay. For the kids there is school stuff, clothes, shoes. There is food. There is eating out, movies, music, games. There are sports and other extracurricular activities.
Spending by itself calls for another level of prioritization, read budgeting, given the many areas or categories of spending that pull at our income. Remember, living within our means is a type of freedom that money can buy, in a sense.
How should we then prioritize? By having a budget and living by it. By setting up automatic savings and saving first. By thinking unselfishly.
Budgeting is prioritizing – deciding who and what gets money and how much.
Saving is prioritizing – saying that putting something aside for another day is more important than trying to have it all right now.
Most importantly, thinking of others is prioritizing – life is about relationships so life should be about other people and treating others as more important than ourselves.