A long time ago, when I was starting to get my finances in order, I did everything I was supposed to do. I made out budgets, I tracked my spending, I watched all the small expenses, and I planned for the bigger expenses. This was all well and good, but something was still missing. I was covering my basic needs of shelter, food, and utilities just fine, but I still didn’t feel like I had a real plan or a blueprint for my future. The extra money in the budget wasn’t really spoken for. It was just kind of hanging out there in space, getting spent on random stuff.
One day I decided to write down everything I wanted my money to do for me. This included things like helping me to retire, to give charitably, to buy a home, to travel, to help out family, and many other things. I thought about all of my beliefs, priorities, and desires. How did I want to live my life? What did I want to accomplish? What kind of person did I want to be? What sort of legacy might I want to leave behind? How could my money help with that?
Once I had all of my ideas down, I ordered them from most important to me to least important. At the time, the number one thing was to save for a house and the last thing on the list was to help out family (since they were a long way off from needing help at that point). The next job was to commit money to each priority. At the time there wasn’t a lot of extra money to allocate to anything beyond the basics. Eventually I decided to allocate a percentage to each goal, with the highest percentage going to the highest priority goal.
Often there wasn’t enough money to give even a little bit to each priority. Some things had to go without. But I felt okay about it because I knew that the things that meant the most to me were getting a share of any excess money. I knew (or hoped) that the time would come when everything on that list would be getting some money, it was just going to take some time.
Over time, the list has been reordered as life and time have changed my priorities. It’s a fluid document. I have a house, so that one is no longer on the list. Retirement moved from number two to number one. Charitable giving and travel have moved up the list because they have become more important to me as I’ve gotten older. I revisit my list each year when I revise my budget to make certain that my money (beyond the basics) is going toward the things that mean the most to me, help me create the life I want to live, and support the legacy I want to leave behind.
Whenever I’m tempted to blow money, particularly larger sums, I think about that list and I ask myself if the item is applicable to anything on it. If the answer is no and I don’t really need the item, I try to find a way to redirect my spending impulse toward something more in tune with my priorities. I’ve been known to come home from the mall and write a check to my favorite charity in the amount of a pair of shoes that I didn’t buy, or to take the same amount and put it into my travel account.
I started that list when I was young and clueless. I didn’t really have a plan for my life and I’d never given much thought to what I wanted out of it. Up to that point I’d just kind of drifted along through school and early jobs. But once I sat down and really thought about my beliefs and priorities it helped me not only with money, but to be a better person in general. I was able to say with certainty what I wanted out of life and I developed plans to get there, financial and otherwise.
It’s hard to live a meaningful and financially fulfilling life if you can’t even articulate what that life should look like. Take some time to sit down (with your family, too) and develop your own list of what you want out of life. Then revisit it periodically to make certain that your priorities haven’t changed and if they have, change the list. It will give both you and your extra money direction and purpose.