Can you "afford" it? The importance of budgeting and setting priorities

When I was younger, the word "budget" had negative connotations. If something was bad, it was "budget". I had an aversion to the concept of budgeting - of admitting that I didn't have the money to do everything I wanted, or admitting that I had sometimes I had to make compromises.

As I've grown older, I'm still reluctant to use the word "budget". I don't like saying that I can't afford to do something. So I'm not yet where I want to be.

But I have come around to the concept of budgeting. And the reality that everyone has to compromise when making financial decisions. 

Big businesses have budgets. Governments have budgets. Even Bill Gates has constraints in terms of what he can spend money on, and needs to make trade-offs and compromises. He's going for polio, but he's not aiming for cancer and HIV, for instance.

So of course, as an individual and as a member of a family, I have to make similar compromises and trade-offs. 

Technically, could I afford a Porsche? Yes. Relative to the other things I need and want to do and buy, can I afford a Porsche? No. I wouldn't be spending my money in the way that reflects my values and desires. There may be a time when, from this perspective, I can afford a Porsche, but that is not currently the case. 

The same goes with the kind of house I would like to live in. Could my wife and I afford the kind of house we want? Quite possibly. But would it be a good decision, right now, in light of the other things we want to do in our lives? No. Not yet. From this broader perspective, we can't afford the house yet.

Having a budget means that you are making conscious decisions about your spending priorities, and ensuring that your spending reflects your values and desires. Not thinking critically about these things is a sure-fire way to ensure that your hard-earned money gets frittered on the things that you don't really want.


Sonnie Bailey

Sonnie is the founder and principal of Fairhaven Wealth.

Before founding Fairhaven Wealth, Sonnie worked in the legal and financial services industries for over a decade.

Sonnie first became involved with financial advice as a specialist financial services lawyer. For many years, he was an “adviser of advisers”, reviewing thousands of advice files prepared by hundreds of financial advisers, and providing feedback in relation to the quality and appropriateness of advice; industry best practice; risk management; and regulatory compliance. He has published work in industry publications and spoken at various financial advice conferences.

Sonnie has also worked with banks, investment management firms, insurers, and derivatives providers.

Sonnie has worked as a private client lawyer, focusing on succession, estate planning and trusts. He ran his own legal firm in Australia before relocating to New Zealand. He has also acted in independent trustee and company director positions.

Sonnie is passionate about helping people achieve their goals and manage the risks to which they are exposed.

He has written extensively on his blog, New Zealand Wealth and Risk, which can be found at

Sonnie is married to his wonderful wife Chrissy, and has two young children, Ben and Anna.