Question

When prioritizing your spending, what is the best order in which you should pay your expenses? A. 1. Basic necessities 2. Other high-priority expenses (e.g., insurance premiums and medical expenses) 3. Creditors or lenders 4. Yourself (savings)

Answer 1

Answer and explanation:

Individuals need to create a budget in which they establish what are their expenses and what is the amount of money available they have for other purposes. In such a case, a standard budget should be set in the following order:

1. Basic necessities
2. Other high-priority expenses (e.g., insurance premiums and medical expenses)
3. Creditors or lenders
4. Yourself (savings)

Basic needs represent all those expenses in items used in everyday activities such as food, hygiene, rent, utilities, and transportation. Other high-priority expenses refer to the costs of services that keep individuals safe in front of unexpected events. Medical, car and home insurance fall into this category.

Credit card and regular loan payments come third since it is also important to keep good credit history for future major investments such as a mortgage. Finally, individuals must save part of their paychecks. It is recommended at least 30% of people's salary to be deposited in a savings account.

Answer 2

The best order of spending priority is from most important to the least important is:

1. Basic Necessities

2. Other high-priority expenses

3. Creditors or lenders

4. Yourself (saving)

Step-by-step explanation:

1. Basic Necessities: The basic human necessities are given topmost priority, because without these cannot be lived without. The basic necessities include: food, mortgage/rent, utilities and transportation, but if the income is still not enough to handle all the basic necessities, the qualities and quantities can be reduced, for example, if chicken is more expensive than beef, beef can be used for food instead of chicken.

2. Other high-priority expenses: this comes directly after basic necessities, and they include; insurance premiums (health, home, car, and life), medical expenses, and other personalized high priority expenses.

3. creditors and lenders: the remaining money is used to clear the debts owed first, because this is a negative on your income.

4. Yourself ( saving); comes least on the list of priorities, but it is very important, because it ensures that there is money available to cushion any emergency needs that may arise.