Your Current Financial Behavior

In my last post about finances, I suggested the relatively straightforward task of doing an inventory of your finances.  This included listing all forms of income and all forms of expense.  (You did do it, didn’t you?  After all, the only way you’re going to have your life as you want it is if you take action on the things that are actionable.)

Okay, so let’s say for argument’s sake that you did list out everything and that you have a pretty good idea of your cash flow picture.  How much goes to paying for essentials like food, water, clothing, utilities, prescriptions, rent/mortgage? How much of your cash flow is devoted to paying back consumer debt? How much goes to on-going service contracts like cell phones, water purification, pest extermination, gardener, pool maintenance, internet connection, cable television, subscriptions to magazines and online services (like games and portals), etc.?  How much goes to “shopping”?  How much goes to entertainment?

Now here comes the challenging part: prioritize your spending.  I’m thinking that for most of you essentials will be number one.  Be specific.  Be detailed.  Rank the costs for gardener and the pool guy separately.  For bundled things (e.g. cable and internet) rank them separately.

For example, how important to you is internet access from your phone?  I know that you get great deals from the phone companies if you take family plans.  Just remember that the phone companies and the cable companies are not particularly interested if you can pay your other bills.  They only want to know if you can pay theirs.  I’m asking that you do it consciously.  Does that make sense?

Look at everything!  Prioritize every expense.  Sadly, your consumer debt must be a high priority item.  Make this list a priority NOW.  The sooner you do, the sooner you’ll be able to make necessary changes.

In the next post, I’ll talk about some goals.