After you've clarified your priorities, what do you do with your new insight?
Each time you spend more than pocket change on a purchase that doesn't help you attain one of your chief goals, ask yourself whether the outlay is really necessary.
For example, let's say your highest priority is achieving financial independence. And let's say you've saved $4,000 to take the family on a vacation. If you take the trip, you'll be an additional $4,000 from kissing the time clock good-bye.
Of course, if your family has been expecting the trip for months, you'd be unfair to tell them that it's off. Instead, from the beginning you should have earmarked the cash for your investment portfolio and either planned a low-ticket vacation or worked a deal with family members to take the trip later.
OK, you say, but that choice isn't terribly difficult. You're more concerned about tougher decisions - choosing, for instance, among such priorities as health care, education and savings.
All are important. How do you resolve conflicts among them? No single approach will work for everyone - but here are some guidelines that help.
Is someone's health involved? If you believe that the ultimate purpose of money is to make life better, then you might decide that saving cash at the cost of your well-being - or that of a relative's - is a poor choice. For most people, someone's illness is the rainy day for which they've been saving. Most would agree there is no single financial goal more important than dealing with - and paying for -catastrophic illness.
How many people will be affected by my choice? Will one of your goals make your own life better while another gives equivalent help to two of your children? You could decide that when more people derive roughly equal benefit from a goal, its priority rises.
If two goals offer similar rewards, which causes the least harm? This method of selection is typically a last resort, but it can be useful when no other analysis helps you decide among options.
Most people, for example, have to decide between the kids' tuition and their own retirement savings. Well, if you know that you won't be able to live adequately on the money you expect from your pension and Social Security, then retirement savings should be paramount. As for the child in college, he can take out a tuition loan.
You can't put every nickel toward top priorities, of course - nor should you. Instead, you need to set aside part of your income for current pleasures, so long as you have enough cash left over to put toward your long-range goals.
Also, remember that as the years go by, your priorities will change. You'll need to reexamine and rank your needs regularly in order to use your money most effectively.
When you can save a dollar, you need to decide why you're putting it away. In addition, if you acquire the habit of quickly rating the urgency of every big purchase against the primary financial goals you've set for yourself, you'll eventually find that your spending is under control.
Mr. Dangerfield is an I.A.P.D.A Certified Debt Specialist whom has worked in the finance industry for over a decade. He manages www.beingbrokesuckstoday.com and is the author of "A Dangerfield Manifesto" and co-founder of SMG Holdings, the parent company of Squad Music Group, Dangerfield Artistic Entertainment SMG Publishing and Taboo Dangerfield Publishing
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