Two Steps to Prioritizing Financial Goals

Setting financial goals isn’t always the most challenging part of building a financial plan. Too often, individuals have a laundry list of goals - and as they move through life, that list grows. However, when it’s time to organize a strategy for pursuing those goals, things get a little bit more difficult. 

When you’re not sure how to prioritize your financial goals, you tend to try and knock them out all at once. Trying to funnel your limited cash flow to multiple goals simultaneously isn’t always effective - especially when done without a strategy. 

You may start to feel like you’re treading water on not just one, but all of your goals. This can lead to burn-out, and potentially poor financial decisions as a result. So, how do you prioritize your financial goals? You start by getting clear on what you want, then determine what timeline you have to accomplish it.

Step #1: What Goals Do You Have?

It can be tough to prioritize your goals if you feel hazy about what, exactly, they are. Generally, your goals will fall into a few specific categories:

  1. Intermediate and Short Term Saving
  2. Debt Repayment
  3. Long Term Saving

Intermediate and short term savings goals might be saving for a down payment on a house or a week-long family reunion in the mountains. Debt repayment encompasses everything from your mortgage to credit cards. Then, long-term saving goals could be retirement savings or legacy-building goals. 

If you can, work to dig a little deeper to uncover specific goals in these three categories. A few examples might be:

  1. Saving for a new car and to boost your emergency savings to 3-6 months of living expenses.
  2. Paying off your mortgage in a specific time frame (like before retirement).
  3. Building a retirement nest egg that will cover your expenses annually and allow you to retire at 65.

You may have more than one goal in each of these categories, and that’s okay. The point is to be as specific as possible when outlining them. Try to outline dollar amounts for each goal, time frames, and most importantly why you want to accomplish that goal.

Step #2: What’s Your Timeline?

To set priorities, you have to know when you want to accomplish each goal. It’s often best to start with your retirement timeline because it will dictate a lot of your other priorities. For example, let’s say you want to retire at 65, and you’re currently 55. You still owe on your mortgage, want to start funding an annual trip to Europe for you and your spouse and have a long-term goal of setting up a scholarship fund at your alma mater. 

Knowing that you want to retire in 10 years might push you to pay off your mortgage faster, push off the annual trips to Europe with your spouse until that’s accomplished, and meet with an estate planning attorney to talk through a scholarship fund as part of your legacy. 

What Happens When Goals Change?

When you organize your goals according to their timelines, you’re taking the first important step toward prioritization! However, like everything in the world of personal finance, your priorities list will likely change with time. 

Sometimes, unexpected expenses or financial circumstances crop up. Alternatively, you might find that your goals and values change as you evolve and discover different, exciting things you can do with your wealth to make an impact. 

There’s absolutely nothing wrong with having your goals change, as long as you adjust your financial plan. This is where working with a financial planner can be useful. Your financial planner can help you to adjust your strategy depending on your evolving goals, and prioritize those goals according to your unique retirement or investing timeline. 

Want to learn more? Reach out! We’d love to talk with you about your financial goals, and how you’re prioritizing them.

Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs, and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.

"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.

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