2. Is it the Best Use of My Money?
So I just received a $10,000 performance bonus. Should I buy myself a nice watch or go for a vacation?
It depends on my financial priorities. Have I paid off all my commitments? Do I have six months expenses in my emergency fund? Have I invested in good educational books this month?
For example, if I still have $20,000 in high-interest credit card debt, I immediately know that's where my bonus should go.
Since most of us have limited amounts of money to play with -- it's important to prioritize.
Having a budget helps with that.