Now that you understand the difference between wants and needs and can identify your goals, it’s time to start thinking about prioritising these goals.
Sorting out your priorities is an important part of the budgeting and saving process. The first step is to rate your goals. You might do this based on a scale of 1 to 10, or based on urgency or importance.
Once you have rated your goals, you'll need to gain an understanding of the pros and cons for each goal, or the costs and benefits of each. During this process you may even need to redefine some of your goals. In fact, goals may change with life circumstances, age, or with achievements.
You'll also want to consider the outcome of the priorities that you have chosen for each goal, as some may conflict with one another. For example, you might want to pay all of your bills off and eradicate your credit card interest payments. But to achieve this, you must forego buying your favourite movie which has just come out on DVD. These two goals would be considered to be in conflict with one another.
To get around such a conflict, you will need to consider your higher priorities, which would be paying the bills; do this first and then buy the DVD. This way, these two goals don't have to be in conflict forever.
Remember, circumstances change, so plan on it.