How To Prioritize Money Goals When Everything Feels Like a Top Priority
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When it comes to personal finances, everything feels like it belongs at the top of the list.
Get out of debt, stash away an emergency fund, save for retirement, give back to the community, invest in your children’s future, but also, life is too short, so buy the shoes.
Everywhere you look there are opportunities to invest or spend your money. Nothing feels optional, so your head is spinning, and you feel like you’re not making headway with any of it.
Getting started on any of it also seems perfectly impossible when you’re living paycheck to paycheck.
Whether you’re living abundantly and just aren’t sure if you’ve got your money going to the right places, or you’re just trying to catch up, getting your financial priorities in order will make sure your resources have the greatest impact.
So, where do you start??
Take a deep breath and work through these financial priorities. Tackle each one, either challenging yourself to bust through a step or setting up an automated system to make sure each goal is in progress.
You don’t have to follow a strict budget month after month, but starting out by writing out all of your income, expenses, and payments each month will give you an idea of what you have available to work with.
Priority #1: Live within your [current] means.
If your checking account is currently overdrawn, you are stressed out just trying to make payments before the late fees kick in, or if you have balances that carry over on your credit cards from month-to-month, you are living a life that you can’t afford.
Take a step back and evaluate what you really need right now.
This is the phase that might get a little uncomfortable, but it is only for a little while. You’re going to set yourself up to finally start working towards the life of your dreams.
It may be hard, but you can totally do it.
Take big action to change your situation.
§ Cancel subscriptions. Go through your last credit card or checking account statement and see if there are any recurring charges that you can eliminate (even for a little while). Amazon Prime, Audible, Netflix and other streaming services, premium versions of apps that you don’t need, membership boxes or shopping subscriptions, etc. Cancel them, even just for this month, to see how it feels without them.
§ Pantry challenge. Go through your pantry and challenge yourself to cook meals with as many on-hand ingredients as possible to cut down your grocery bill.
§ No-spend challenge. Make it fun to see how long you can go without spending any money. Drink only water for 30 days, commit to eating at home, spend your time at home with friends, at the library, or at a public beach. Get an accountability partner to do this challenge with you!
§ Be brutally honest with yourself. Keep a spending log to see where your money is really going.
§ Get a second job or start a side-gig to increase your income. Absolutely everyone is hiring right now – pick up a serving or assistant job even just for a few hours to pick up some extra income. Many of our favorite brands offer referral programs where they will pay you for sharing products you love with you friends – without paying to become a distributor! Use the Get In Touch page to message me for a free coaching session to identify your personal opportunities for earning additional income.
§ Downsize your home or vehicle. If it makes sense for your situation, move to a more affordable place. Sell your car and buy something you can afford. With record-low interest rates, now (March 2022) is still a good time to refinance your home to reduce your monthly payments and interest costs. Refinancing may be a good option if you’re currently in the home you want to stay in forever and if your current interest rate is higher than the market rate now.
If you are able to pay all of your regular bills on time and pay off all credit cards each month, you can set your focus on taking the stress out of money.
Priority #2: Plan for the days, months, and years ahead. Set up the system, so that you don’t have to worry about money.
With a checkmark next to Priority #1, you are living within your means. Nice work! But what if your car or home needs a major repair tomorrow? What if you get into a car accident or need a major surgery? What if you lose your job?
You don’t want to be suddenly thrown into a life that you cannot afford.
Life happens, so plan for it.
Open a Sinking Fund savings account.
Make a list of all of the expenses that pop up every once in a while, like paying for Christmas or vehicle insurance or the half-of-beef you order from the butcher every spring. Write down each expense as an annual amount. Total them up and divide by 12 to create a monthly expense for those things. Transfer that amount to your Sinking Fund account each month, so that when it is time to pay those bills, you’ve got the money already set aside for it.
Next, open a separate savings account for an emergency fund.
Put $1,000 into this account as soon as possible. (For ideas on how to gather $1,000 for your emergency fund NOW, see the “big action” ideas under Priority #1.) Then set up an automatic transfer to slowly grow this account. Eventually, you want it to cover six-months expenses. As long as you’ve started and are growing your emergency fund, I wouldn’t worry too much about how quickly you’re getting to that six-month amount. I am only putting $50 each month into mine right now. It is up to you to determine the size of an emergency fund that allows you to not stress over money.
Don’t wait for retirement to become an emergency.
Take advantage of the years that you have and start planning for it now. Talk to your HR department about participating in your company’s 401k program or open an account at Vanguard. If you don’t feel like you have enough money available to invest, open a savings account and set up an automatic transfer to occur the same day as you receive your paycheck.
Don’t be bolder with your spending than you are with your saving.
If you’d spend $10 at a coffee shop, $100 on a night out, or $200 on a new purse, without being afraid how you will pay your bills after, you have money available to invest in yourself.
Start with $1 or 1% of your income and slowly grow to 15% of your income.
With your expenses taken care of, a small emergency fund started and growing,
Priority #3: Ditch your debt! Start your snowball and watch it grow.
I know, this is the super-nerdy part, but hang in there!
Make a list of all of your debts; put them in order from smallest to largest.
Plan to tackle them in order from smallest to largest. But include the monthly payment amounts and interest rates. Hopefully your smallest debt will have the lowest monthly payment amount and highest interest rate, and your largest debt will have the highest monthly payment amount and lowest interest rate. If not, you may want to put a debt with a relatively low balance but high monthly payment amount or high interest rate first for the fastest impact on your situation. Use the Get In Touch page to send me your list of debts if you’d like help prioritizing them. I’d be happy to help you make a game plan!
Choose the smallest debt and add at least $1 to the minimum payment amount. This is your “snowball,” grow it as much as your spending plan allows. When your first debt is paid off, add the minimum payment amount to your snowball amount and use all of that to start paying extra on the next largest debt. Make your snowball payment automatic using your bank’s online Bill Pay feature, so that you don’t have to think about it each month.
Continue this process until you are debt free!
This may take some time, especially if you have a large mortgage, so get your snowball rolling and move onto Priority #4 while it grows.
Priority #4: Give back.
When you are financially stable and have your immediate needs met, you also have the ability to help others who aren’t in such a fortunate situation as you.
Take some time to choose an organization with a mission that you want to support. Keep in mind if the organization is paying large salaries and to whom. You want to make sure that your dollars are making the greatest impact possible.
Choose an organization to support and set up automatic giving. Choose an amount that fits into your spending plan and slowly grow it from there. Our church and school has an automatic giving program that allows me to set the amount I want to give, and it comes out of my account each week. I love that we can give without remembering to bring money with to church each week and give even when we don’t make it to church!
Priority #5: Live like no one else to live like no one else.
You’ve got all of the basics covered. You’re paying down debt and giving back; you’re doing great!
This may seem like the time to kick your feet up and spend on whatever you want. It’s a dangerous phase and it is just as important as ever to have a plan to put every dollar to work to make sure that you are using your abundance for the things that matter most to you.
This is where it can be super tempting to feel a need to keep up with the Jones’s.
Remember that there is a difference between being able to afford something and wanting to afford something.
Just because you might have the ability to take on a big car payment or upgrade your iPhone, doesn’t mean that you should. There are probably things that are more important to you.
This is the fun part.
Take some time to dream big for your future.
What would make you feel as though you accomplished everything you wanted to? What does your best life really look like?
§ Saving a down payment for a house.
§ Making improvements to your current home.
§ Create memories on a family vacation or buying a vacation home.
§ Investing in your education or other opportunities for your future.
§ Giving special gifts to loved ones.
§ This may even just be a special date night or a great pair of shoes.
Whatever would make you feel as though you’re living life without holding back.
Add it to the list.
Put the items on the list in order, starting with what you’re most excited about.
Open a savings account and set up an automatic transfer to this account. Start with whatever works in your spending plan and grow the amount from there.
Once you have enough money in the account to cover the first item on your list, spend that money guilt-free and start saving for the next item on the list!
Priority #6: Leave a legacy.
I’ll probably ruffle some feathers with this, but my absolute last priority, when it comes to money, is paying for my children’s secondary education.
Children have more time to pay for their own education than you have to pay for your own retirement, mortgage, etc.
Your children aren’t better off if they have to worry about taking care of you in retirement, and you don’t want to regret living too conservatively during their childhood.
There are other ways to invest in their futures and enrich their lives besides saving for a college education.
Prioritize a stable situation for your family, investing in enriching family activities and experiences, and encourage your children to pursue skills and work experience to invest in their own futures.
As long as you’re not putting your family in a risky situation or holding back from living life to your full vision, then go ahead and invest in their education, invest money for their futures, and leave them with your legacy.
What is your top financial priority?
Is there anything else you would add to this list? What actions are you taking right now to focus on your next financial priority?
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