Setting Financial Priorities

Set Financial Priorities

Fri, Jul 3, 2009

What are your financial goals and priorities?

Many people dream of debt free day, or just think about having a balanced budget tomorrow. Others have goals of paying for their children’s college education and some just want to help their children avoid the same mistakes they did.

I often think about financial goals because knowing your goals and priorities is the foundation of every plan. Think about it. If you don’t have goals it’s difficult to determine spending decisions in your monthly budget. Is your immediate goal to pay off debt or save for emergencies? Without clearly establishing priorities you may not make the best spending decisions towards achieving your most important goals. Therefore, everyone should know their financial goals and top priorities.

I sometimes visit CNN Money online and browse the content in their personal finance category. I recently came across their Money 101 lessons and lesson 1 discusses setting financial priorities. According to the article, there are 10 top things (summarized below) you should consider in setting your financial priorities.

Top 10 Things to Know in Setting Financial Priorities

Narrow your objectives.

Decide on the goals that are most important to you and your family.

Focus first on the goals that matter.

You can’t work on every goal at once. Take the time to prioritize them and choose to work on the most important goals first.

Be prepared for conflicts.

When goals conflict (you’re not sure which to tackle first), I personally recommend considering the priorities Dave Ramsey sets in his Baby Steps.

Put time on your side.

If you’re consistent over time in your savings and investments they will grow. The same could be said with following your plan to get out of debt. The takeaway for me on this is to be patient. Follow your plan and believe you will succeed.

Choose carefully.

Choose the goals that matter the most to becoming a better steward of your money and building financial security for your family.

Include family members.

Take the time to plan your goals with your spouse. My wife and I try to sit down and review our goals once per year.

Start now.

There is no better time than now to start managing your money wisely, setting goals and building plans to achieve them.

Sweat the big stuff.

Keep your goals in focus. Consider other options, for example, if a large vacation may take you off track from paying off debt. Look for a less expensive way to relax.

Don’t sweat the small stuff.

It’s okay to have some spending allocated for fun as long as you take your goals into consideration as you make spending decisions.

Be prepared for change.

Goals may shift as stages in life change. For example, we’ve learned there are plenty of expenses associated with having young children. As the children grow older the types of expenses change.

If you take away two things from this article, I would suggest setting the time to plan you goals with your spouse, if married, and start now. Schedule time this week to list your goals on paper and priortize them!

Can you think of other things to consider when creating your goals and setting your financial priorities?