Determining Family Spending Priorities

Children learn from example, and one way that you can help your children learn about saving money and establish spending priorities is to make an effort to decide what your family spending priorities are. Even though my son is “only” seven, my husband and I frequently discuss money and our priorities around him, and ask him for his thoughts on specific items that apply to him.

The Importance of Having Spending Priorities

In order to keep your financial life on track, it is important to have spending priorities. As part of a plan, articulating priorities can help you make decisions that will keep you on track to meet your goals. When you know what is important to you, as a family, your spending choices are more likely to be in line with your values and they will help you move toward financial freedom.

Those without an overall financial plan quickly find themselves spending money on things that they don’t particularly need. Even though my son is seven, he already knows how important it is to set money aside for savings, and give some to our church.

The first thing we do when my son gets his allowance is set aside 10 percent for our church and then set aside 20 percent for long-term savings. Knowing that charity and savings are important priorities in our lives makes some decisions relatively straightforward: We know exactly where our money will go first and saving up for the future is built in to our plan.

Deciding on Your Spending Priorities

Every family is different, of course, with different priorities. If you children are old enough, they can be included in discussions about priorities.

Before deciding on a spending plan, figure out what your priorities are. Get thoughts from different family members about what they would like to do with the family’s money and set goals. Decide together whether charity is important, how quickly you want to get out of debt, whether saving up for a vacation would be a worthy family goal, and what extracurricular activities are most important.

Make a list of your expenditures, and order them according to importance. Near the top of the list (but in different orders), you are likely to have food, retirement savings, college savings, housing payments, gas and utilities. At other places on the list, you might have extracurricular activities (list each individually), such as entertainment, special family savings goals and other items. Rank these items according to importance and whether they will help the family reach a long term goal of financial freedom.

Once you have completed your rankings, you will have a list of spending items that are important to your family. If tough months come, you can stop spending on the things at the bottom of the list. While it’s never fun to cut back on your spending, when you have determined priorities, at least the decision is a little easier to make.

Miranda is a journalistically trained freelance writer and professional blogger. She enjoys writing about family and personal finance, and also writes about science and technology. Miranda has contributed to a number of publications, online and off, including Discover magazine, PhysOrg.com, Moolanomy, Personal Dividends, MoneyNing, and Mainstreet.com. You can read her Personal Finance Corner at AllBusiness.com. Miranda lives in Utah with her husband and son.