How to Prioritise what to Spend Your Money on

If you are feeling short of money, want to save money or have extra to repay a loan, then you may have to think carefully about what you are spending your money on. We spend money on a lot of different things and it is important to think about which things we should pay for first. There will be disagreements between individuals as to what should be bought first but hopefully this list will help you to think harder about it and decide what might work for you.

  • Pay yourself first – this is a mantra which many people stick to where they make sure that they put some money into their savings account as soon as they get paid. They do this so that they know that they have saved some money and hope that they will be able to budget carefully for the rest of the month to ensure that it is something that they will be able to afford. Many people would rather wait until they are about to be paid and then put any money left into savings. However, this could be risky as they may not have anything left and so there will be nothing left to put into the account.
  • Basic food – we will need to make sure that we can eat and so prioritising food is important. However, there are lots of different foods available and we will often buy food that is more expensive than necessary or we buy more food than we eat or than we need. Basic food would just include three meals a day, made from scratch with basic ingredients. No take away food, eating out or ready meals. No snacks such as sweets, cakes biscuits, chocolate or crisps. No drinks such as alcohol, fizzy drinks, juices or take away coffee. By starting with a really simple approach then you will save a lot of money.
  • Rent/mortgage – if we do not pay these, we could end up with nowhere to live. It is therefore really important that we prioritise spending here. However, it can be possible to spend less in these areas if we are careful. For example, if we make sure that we are not living in a property that is unnecessarily big that can help. Also, the area that we choose to live can be a big factor in the cost as well. Think about whether you will be prepared to move so that you can keep those costs down.
  • Loan repayments – you must cover your loan repayments or else there will be consequences. These could be in the form of you being charged extra money and a poorer credit score. If you miss too many payments then you could be taken to court or have items form your home taken away. If you have used something as collateral on the loan, such as your home or car, then that could be taken away.
  • Utilities – we need to pay our utility bills if we want to make sure that we have water, electricity and gas. Without paying these we could get cut off and this will not be good at all.
  • Contracts – if we have any contracts, we will need to pay these. They could be for our phone, broadband or other things. We are obliged to pay them and if we do not, we can risk having higher charges or going to court.
  • Transport to work – it is really important that we can get to work so that we can earn money and therefore, whether we have a car or go by public transport, we need to make sure that we can cover those costs. This may also need to include the cost of travel for children to school, whether they are taken in the car or go by bus or train.
  • Clothes for work and school – it is also important to have the right uniform or clothing for work and school and these need to take priority spending wise over other clothing.
  • Compulsory insurance – there are some insurances we have to have such as life and buildings insurance if we have a mortgage and car insurance. If we do not have these then we can get into trouble, With no car insurance we could get banned form driving and the car could get taken by the police. With no buildings insurance we will have to find the money to repay the mortgage company for our home if it falls down, is burnt down or damaged in other ways and without any life insurance if we die before the mortgage is paid off it will be up to our next of kin to take it on.
  • Basic toiletries and cleaning products – we will want to keep our home clean and ourselves. Therefore, we will need to buy some things to help us to do this.
  • Telephone and broadband – although these may not have been considered to be necessities in the past, we would find it very hard to get on without them. They enable us to apply for jobs, do our banking, keep in touch socially and all sorts of other things which could be very useful to us.