I think that we should allocate our money into 5 categories.
1. Necessary expenses. I am talking electricity bills, food, school fees (if you are studying or have children), housing, healthcare, and transportation. I believe this group is where most of our money goes because we basically can't survive without these things.
2. Emergency fund. In cases of emergency, we should be able to get some money for it. Especially in countries where healthcare is not free, we should be prepared to pay if ever we get into accidents or we get sick though hopefully it never happens but still we have to be always prepared either way.
3. Savings. Some people save up for specific things like buying a better house, a better car, getting your kid into a better school among other things. Some people may just save for the sake of having money to pull for emergencies. I think emergency money and money I want to use into building a new home should be separate.
4. Investment. Aside from our day jobs where we get most of our money to pay for our necessary expenses, we should invest in assets to make our money grow. This could be gold, real estate or cryptocurrencies.
5. Luxury. When I mean luxury, I do not actually mean it has to be expensive. But I say luxury because there are things that we do not need but still want to have or experience like traveling or eating at a good restaurant. I believe that even though we should be smart in finances this does not mean we have to completely deprive ourselves of enjoyment.
1.
Necessary expensesYou would be needing up to consider it out or your main priority on which this is where we do survive on which paying up the bills, foods,shelter and other necessities or needs on which you would be needing up to allocate and prioritize specially if you are the main provider.
2.
Emergency fund3.
SavingsThese two things are just that the same i should say on which you can make that emergency fund to be also considered as savings yet you've been that allocating a budget for that on which
you should eb trying out to make yourself that avoiding on spending it no matter what not unless on that specific period like on emergencies then these is where these funds are for, but if its not then you shouldnt
be that trying out to make use because once you do and then time comes then you're fucked up.
4.
Investment or
Business You can also pull those funds from savings on putting up some money into these ventures specially if you do saw that opportunity then you can always have that option for you to deal up with it.
The thing on here is that you should be that atleast be considerate about into the risks involved so that you wont be ending up on being that devastated and you should be that making yourself that being prepared on whats to come it could neither be that a failure or success.
5.
LuxuryThis should only be done when you do have that sufficient money or extra on which you can be able to pay it up with cash and never ever involved with having loan or debt as much as possible.
If you cant be able to afford it then dont buy and this should be a principle that you do need up to follow so that you wont be experiencing any problems. This is why its important that you do know on what you should be gonna doing.