Get Your Financial Priorities In Order

Many people struggle to find balance in life. Whether you are seeking financial, personal or professional balance you must first learn how to get your priorities in order to find success. The term priority is defined as “something given or meriting attention before competing alternatives”. To find balance in life you must make a list of your priorities and list them in order of importance. Unless you are independently wealthy and have enough money to achieve all financial goals simultaneously, you more than likely play a juggling game with your money as you work toward several different financial goals. Here we look at what goals are most important and what goals are farther down the list of financial priorities.

Paying bills- At the top of your list of financial priorities is paying for bills necessary to survive. All other financial goals are moot if you don’t have a place to live or the basic necessities in life. If you are working with a limited income and struggling to pay everything at once, you must make the decision to pay housing expenses, utilities and day-to-day living expenses first before focusing on other priorities. If you are just getting by paying these expenses, you want to look closely at where you can cut costs to free up more money for other financial responsibilities. This may include canceling cable or Internet services or dropping gym memberships.

Savings- In a struggling economy, many people find themselves weighing the need to save money or pay off debt. Having a well padded savings account is one of the best ways to avoid future debt, however if you are losing hundreds of dollars each month to high interest debt, you may not have time to build up the desired amount of savings. With that being said, after paying bills, you should try to tuck away just a few hundred dollars to have a small cushion of money for emergencies. When you are living paycheck to paycheck, missing a few days of work can put you so far behind the eight ball you will struggle for months to catch up. By saving a few hundred dollars you have the peace of mind that should you find yourself with even less available cash, you have something in the bank to get you by in the short term. Once you get past your financial hardship you can then focus on building an adequate emergency fund as well as putting aside money for retirement.

Pay off high interest debt- There is nothing more frustrating than watching your balances grow to epic proportions due to high interest rates. Clearly making the minimum payment will never get you out of debt, however if you are truly facing tough times, you should at least make the minimum payment to avoid late fees and other penalties that occur as a result of not making the minimum monthly payment. Ideally you should tackle your high interest debt aggressively to pay down your balances and stop the hemorrhaging of money. Once you have eliminated your high interest debt you will have extra money to put toward other financial goals.

Retirement contributions- If you have managed to get to this point, you are in good shape. You are paying your bills, have a growing stash of money in savings and have paid off your high interest debt. Now you must try to make up for lost time and begin contributing toward your retirement. If your employer offers a tax deferred retirement plan take advantage of this opportunity to sock away money each paycheck toward your retirement. If your employer provides a company match, all the better, increasing the money that goes into your account with no effort on your part.

It is almost impossible to address all financial goals at once, especially if you are dealing with a financial hardship. By prioritizing your financial goals you can make it through tough times and continue your journey toward other goals.