After you've clarified your priorities, what do you do with your new insight? Each time you spend more than pocket change on a purchase or investment that doesn't help you attain one of your chief goals, ask yourself whether the outlay is really necessary or whether it can be deferred.

For example, let's say your highest priority is achieving financial independence. And let's say you've also saved $4,000 to take the family on a vacation. If you take the trip, you'll be $4,000 farther from kissing the time clock good-bye. (Farther, actually, since $4,000 in savings would grow to nearly $20,000 invested at a tax-deferred 8% for 20 years--as the Savings Calculator would show.) Of course, if your family has been expecting the trip for months, you'd be unfair to tell them that it's off. Instead, from the beginning you should have earmarked the cash for your investment portfolio and either planned a low-ticket vacation or worked a deal with family members to take the trip later.

Okay, you say, but that choice isn't terribly difficult. You're more concerned about tougher decisions -- choosing, for instance, among such priorities as health care, education and savings. Suppose, to take a wrenching example, that your father needs help paying for bypass surgery at the same time that you're getting socked with tuition bills and trying to save for retirement. All three expenses are at or near the top of your priority list. How do you resolve conflicts among them? No single approach will work for everyone--but here are some guidelines that may help.

• Is someone's health involved? If you believe that the ultimate purpose of money is to make life better, then you might decide that saving cash at the cost of your well being--or of a relative's--is a poor choice. For most people, someone's illness is the rainy day they've been saving for.

• How many people will be affected by my choice? Will one of your goals make your own life better while another will give equivalent help to two of your children? You could decide that when more people derive roughly equal benefit from a goal, its priority rises.

• If two goals offer similar rewards, which causes the least harm? This m ethod of selection is typically a last resort, but it can be useful when no other analysis helps you decide among options.

Let's take the above supposition that your father needs expensive surgery, you have a child entering college and your retirement isn't adequately funded. Obviously there are a number of ways this decision could be analyzed. It would be selfish, for example, but not totally unreasonable to conclude that saving for your own retirement should be paramount. You know that you won't be able to live adequately on the money you expect from your pension and Social Security, and you don't want to depend on your kids for support. As for the child in college, he or she can take out a tuition loan. And perhaps your dad can have the operation at a community hospital where it will cost less than at a big university medical center. That logic falls apart, however, when analyzed by the principles above. Both the "health" and the "least harm" principles suggest that helping your dad should be priority No. 1. (If only all your choices were so straightforward!)

You can't put every nickel toward top priorities, of course--nor should you. Instead, you need to set aside part of your income for current pleasures, so long as you have enough cash left over to put toward your long-range goals.

Also, remember that as the years go by, your priorities will change. You'll need to reexamine and rank your needs regularly throughout life in order to use your money most effectively.

When you can save a dollar, though, you need to decide why you're putting it away. In addition, if you acquire the habit of quickly rating the urgency of every big purchase against the primary financial goals you've set for yourself, you'll eventually find that your spending is under control.