How to Prioritize Multiple Financial Goals – A Guide to Managing Competing Objectives

No matter if it’s paying down debt, saving for retirement or education of their child(ren), or both – many people have multiple financial goals which often conflict.

Prioritizing these goals based on urgency, importance and feasibility can help you create a plan to meet them all. Here are a few helpful suggestions: 1. Be sure you have emergency savings available.

1. Focus on the Big Picture

As soon as you have multiple financial goals, it’s essential that they be prioritized and planned out carefully. For instance, if your ambitions include saving for a house deposit, purchasing a vehicle and clearing off credit card debt simultaneously – it’s vital that you review your overall picture and identify which goals should take priority at any one time. Consulting a financial planner could offer valuable insight as they might have strategies or ideas you hadn’t considered previously.

Start by writing down all of your goals, then categorizing them according to essential, important or aspirational categories. Essential goals should always take priority – such as saving for retirement or creating an emergency fund – while important goals reflect core values like paying off debt or funding your children’s education. Aspirational goals can include more flexible choices like traveling more or purchasing a car.

Recognize that your lifestyle and priorities may change with time, which is why reviewing your financial goals on an ongoing basis is recommended. For instance, if your income increases significantly or an event occurs that alters your life significantly, adjustments may need to be made accordingly to save for retirement or meet emergency expenses.

2. Prioritize Your Retirement Savings

While financial experts often advise us to work on multiple goals at once, it’s wiser to prioritize which goals matter the most to us based on personal values and priorities. For instance, retirement should take priority over saving for a home purchase or college tuition fees for your children.

Prioritize emergency savings. Saving three to six months’ worth of living expenses can help protect against debt when unexpected expenses arise, providing peace of mind.

Once your emergency savings account is in order, make it a part of your routine to contribute the maximum possible to your employer’s 401(k) plan (or equivalent), so as to take full advantage of any matching contributions. Next, focus on investing in an IRA for long-term goals like education costs or retirement.

3. Make a Budget

At any stage in life, creating and sticking to a budget are critical to managing money responsibly and intentionally. Unfortunately, though, when multiple goals compete for your resources it can be hard to prioritize what needs to come first.

Begin by setting both short- and long-term financial goals. Next, determine your monthly income sources including wages, savings accounts, investment earnings and any other sources of funds.

Locate how much is being spent every month on expenses such as rent/mortgage payments, food, utilities and debt repayment as well as non-essential purchases such as music subscriptions, TV purchases and dinner out. Once this amount has been calculated, use it to figure out how much to put toward your goals each month; commonly this is divided as 50% necessities/30% wants/ 20% saving/investing but your situation may require different allocation.

4. Automate Your Savings

To reach both short- and long-term financial goals, you should set up automated contributions that put money in these accounts automatically. This could involve anything from splitting up a direct deposit and funneling it directly to savings; or setting up a regular transfer from main checking into goal-specific savings accounts.

One way to ensure you reach your financial goals is to integrate them into daily life – this means automating savings and prioritizing them within your budget.

With proper organization, it’s possible to successfully balance the demands of paying off debt, saving for retirement and planning a vacation all at the same time. Be sure to periodically assess your priorities as your cash flows change (e.g. if you get a raise or settle an outstanding debt), as this could prompt changes to automated savings allocations that enable you to reach your goals more quickly.