Prioritizing Financial Goals
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You have done well, because now you should have a list of specific financial goals. It’s like a journey. You know where you want to go and now you have a road map. It’s a general map but at least you have a destination. Without a destination it is very difficult to make the journey. To start the trip you need to make sense of your map and make some priorities. A priority means one of one, so you need to discharge the first priority before moving onto the second one.
How to Prioritize
Again this is relatively simple. Take your list of goals, ask yourself which is the most important objective to reach, mark it down as number one and proceed through the entire inventory organizing the material into a hierarchy. Once you have finished, rewrite the list in the order you want it to go.
Example: Maybe you decide you want to discharge your debts first. This makes a lot of sense. Depending on the level of debt, you will possibly discover this is a medium term goal. But what about short term goals. Maybe there is something there that has to come first to make the debt cancellation plan work out. It might be something like quitting smoking to help pay for the monthly payments or something like that. That would be your priority. Get the first step out of the way so you can proceed to the second one.
Beware
Never get yourself in such a tight position that in order to secure your monetary objectives you put other areas of your fiscal life at risk. If the strategy puts you under stress, economic or otherwise it is not a good strategy.
Payment Priorities
The most important item you need to pay for is food. You can reduce costs here, but don’t skimp or eat unhealthily as it will put your physical state at risk. Secondly comes housing. You need to pay your rent or mortgage regularly and on time otherwise you can put this important aspect of life at risk. Thirdly, you want to pay the utility bills. It’s not much fun to live without electricity. Ensure you have sufficient money to meet these bills promptly as they fall due. Fourthly, you will have transportation costs. You need transport to get to work, if you can’t go to work you can’t earn money to meet any monetary goals. Pay your car loan or other transportation costs before you pay off your secured loans. Fifthly secured loans, this has already been covered but a secured loan is something, which the creditors can take away from you if you become a debtor this includes house and car. Sixthly, Unsecured loans. Credit card debt is an unsecured loan, as you have not put anything up front which can be taken away from you and lastly and sadly comes savings. When we look at this hierarchy it can help us determine how to prioritize financial goals. I hope this helps!
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22 May 2008, 3:23 pm
[...] Prioritize your Financial Goals - Once you’ve established your goals, you’re ready to break them apart to separate the important from the not so important. [...]