I have been thinking a lot about financial priorities recently. I have done some writing about how to set financial goals, but not specifically about prioritizing them. Nor have I really addressed the fact that your priorities WILL change, even if your goals don’t.
For instance, 3 years ago, I wanted to be a world class financial advisor, take a tropical vacation once a year, and workout multiple times a week.
Today, those are still goals, but I also have new goals thrown in there that take higher priority than some others at the moment. For instance, I’m now a mom. My priorities turned on their head. While my goals haven’t changed, there are now more of them.
Here are some common goals I hear from clients:
- Pay off their mortgage
- Have a 6-month emergency fund
- Have a $1 million portfolio
- Retire at 55
- Travel the world
- Earn their next professional designations
- Spend $XXX,XXX/year in retirement
What is interesting, is that I generally don’t see people prioritize or number their goals. They’re all listed, but I usually have no idea which ones are MOST important to them. Some people might be able to easily meet all of their goals all at once. Others might have to think about which ones are most important to them and focus on those first.
- You want that 6-month emergency fund? Great! But you might not be able to spend money on an international vacation this year.
- You want to retire at age 55? Awesome! But you might not be able to spend 6 figures a year in retirement.
- You want to pay your mortgage off early? That’s a wonderful goal! But you might not be able to afford maxing out your Roth IRA for a while; working to the $1 million portfolio mark may also take longer.
Prioritizing your goals doesn’t necessarily mean “deleting” any of them. However, in some instances after prioritizing your goals, you might realize that some of them are working against one another. That is when you need to take a hard look at your values and determine which is the current higher priority.
Again, once you set a goal, you should work very hard to meet it and not let yourself just remove it. You would just be letting yourself down. However, because of different circumstances that life throws your way, it is perfectly fine to reprioritize. If you’re unsure how to prioritize your goals, talk to your spouse, a trusted friend, or your financial advisor!