Everyone is on their own unique personal finance journey. This makes managing money exciting—but also confusing at times. You might look around and see the people nearest you focusing on different goals like buying property, paying off debt, saving for retirement, traveling, investing, etc. It’s all too tempting to compare yourself to them. You may begin to wonder if you should also be doing certain things. How can you know if you’re making wise decisions that will get you where you want to be in life?
In the end, only you can decide which outcomes you find most fulfilling. It’s important to stay loyal to your short- and long-term goals. This means setting financial priorities and sticking to them—using them as a guide to shape your behavior when it comes to money.
Establishing Your Financial Priorities
It’s time to have an honest dialogue with yourself. The experts at Money recommend making a list of “all the things that you’d need to feel secure, happy or fulfilled.”
Since people have different standards, lifestyles and expectations, this is where priorities will start to diverge. Some people will choose to focus first and foremost on getting rid of their debt. Others may find themselves focusing on working toward big-ticket purchases like a vehicle, home or business. The more specific you can be, the better. This will help you estimate more accurately what you need to do to turn these dreams into reality.
It’s also important to consider your timeline. Although more immediate goals often feel more urgent, consumers can also benefit from zooming out to take a big-picture look at their financial situations. Andrew Housser, debt relief expert and co-founder of Freedom Debt Relief, recommends everyone asks themselves where they want to be in one, three and five years from the present moment. Then they should take actions to bring it to fruition.
Making Your Financial Goals a Reality
You’ve “talked the talk” by cataloging your finance goals. Now it’s time to “walk the walk.” How? Start by breaking your seemingly large goals into more manageable chunks so they seem less overwhelming. This will help you avoid feeling intimidated so you can build some positive momentum. The road to every big goal begins with a series of small actions; it helps to remember that you’re not suddenly responsible for coming up with a large sum of money overnight.
One thing we, as humans, can all address is acknowledging our bad habits so we can turn them around. For instance, looking over your bank statements may reveal certain counterproductive spending habits. If you’re seeing a lot of restaurant food, non-essential purchases and rideshares, you have a great opportunity to tighten up your spending in these costly areas. Be honest with yourself about the excuses you use to justify avoidable spending so you can work on changing your thought patterns. Put the money you would have spent on guilty pleasures into your savings account, or even an envelope tucked away for safekeeping. Then apply these savings to your priorities.
Knowing your options is paramount. If you want to eliminate debt, research options like consolidation, settlement, counseling, bankruptcy and more. If you want to save more for retirement, make sure you understand your employer’s approach to employee 401(k)s and revisit your individual contribution. If you want to purchase property, start exploring the options available in your desired area so you know how much to save and how to make your investment count.
When it comes to setting financial priorities, the power is in your hands. Start by writing down financial goals, near and far. Then change your action to manifest them.