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It can be easy to feel like you need to achieve all of your financial goals at once – to maximize your retirement contributions, pay off thousands of dollars in debt, save for a house, save for your kids’ college tuition, buy a car and more. This list can be overwhelming to start thinking about.
In some cases, it may even be necessary working on multiple goals at once. For example, most financial experts today recommend paying down debt and investing money simultaneously.
It can seem daunting and sometimes even impossible. But taking a few small steps can help you clarify where you want to go and how to start managing them all effectively.
Make sure your goals are achievable
Select previously spoke with Mint CFP Brittney Castro who explained the importance of making sure the financial goals you set for yourself aren’t too extreme. According to Castro, when your goals are too extreme and you go into an “all or nothing” mindset, you’re essentially setting yourself up to fail because you don’t account for all the “grey” areas of life that exist. may appear. at the top.
For example, if your goal is to save $500 per month, but you haven’t even started saving $50 per month, it will be very difficult to take the necessary steps to ensure you have room for reach $500 every month.
Plus, when you’re too extreme with your goals, it makes any balancing act so much more difficult than necessary.
Setting more achievable goals starts with taking a look at your spending plan or budget so you know how much room you really have to make progress toward each goal. You can use an app like mint, which lets you connect your bank accounts, credit cards, investment accounts, and other financial accounts so the app can automatically categorize your transactions. This gives you an easy way to find out where your money is going each month.
Or you could look more to software like You need a budget (better known as YNAB) for a zero-based approach to budgeting.
Prioritize your needs and desires
Prioritizing your goals can help you feel confident that you are taking the necessary action right now. Imagine putting a ton of energy behind a goal all year only to realize that it would have been safer to put some of that effort into something else. It could discourage you and even shake your confidence when it comes to managing your money.
First and foremost, you need to prioritize building your emergency fund if you haven’t already. Your emergency fund can cushion you when it comes to covering unexpected expenses without putting yourself in too much debt. It is therefore important to have saved the equivalent of three to six months of necessary expenses (or another amount with which you feel comfortable).
High-yield savings accounts, such as the Ally Online Savings Account or the Marcus by Goldman Sachs Online Savings Account, can make progressing towards that three to six month goal a little easier. These accounts generally earn you more interest each month than traditional savings accounts. In other words, your account balance increases even if you don’t make additional contributions. Granted, you won’t earn hundreds of dollars in interest each month, but a few extra dollars are always better than a few pennies each year.
Then you might think about some of your other savings or investment goals. One factor you could use to prioritize how you save for these goals is to think about your time horizon to reach them. For example, if you plan to begin the process of buying a home later this year, saving for a down payment will likely be a higher priority than saving for a goal that will come up in a few years.
And for goals that aren’t yet a priority but you still need to prepare for, you might consider using a robo-advisor like Improvement Where wealth front to help you automatically invest money for those distant goals. They do the hard work of choosing investments based on factors like your goals, time horizon, and risk tolerance, and they’ll rebalance your portfolio over time so you hardly have to think about it.
Remember to work into some of your desires. While your financial needs, such as building an emergency fund and investing, are very important, you should also consider what things would be good to work towards in order to create balance in your financial life. Maybe you like to travel and want to take a week off every year. You can do this by creating a space to save money each month for your trip.
Automate what you can
Of course, you can manually transfer money from your checking account to your savings account each month, or manually log into your credit card company’s platform each month to pay your bill. But there are huge benefits to put these processes on autopilot.
When you need to decide how much money to manually transfer to your emergency fund or invest each month, chances are the amount you contribute will depend on how much you’ve recently spent on your daily expenses. In some cases, you may choose to forego transferring money to your emergency fund so that you can spend it on an expense that has arisen.
We can overcome this by removing the ability to choose between saving and spending. This is where automating your savings comes in.
Automation ensures that our savings accounts will grow (and our bills and debts will be paid) even if we don’t take the time to do so.
Plus, when we spend less time and energy thinking about how much money to invest in our savings or pay down debt, we can spend more time on other important financial goals, like increasing our income.
There are several ways to automate your savings. If you use direct deposit for your paycheck, you can update it to split your paycheck between a checking account and a savings account. This way, part of your paycheck goes directly into your savings account, and whatever is in your checking account is fair game for your normal spending.
wealth front, for example, has a feature that lets you progress towards a variety of goals pretty much on autopilot. If you have a Wealthfront Cash account, you can create different savings brackets (or savings categories) and automatically split your paycheck between them. For example, you might have a bucket dedicated to an emergency fund, a down payment for the house, your annual vacation, and finally a new car.
Another easy way is to set up automatic deposits from your checking account to your savings account. Set deposits to occur on the same day each month (such as the day after your paycheck arrives in the account). In this way, you will regularly save a fixed amount of money without even giving yourself the possibility of using it for anything else.
Make an appointment with a financial planner
If you feel overwhelmed by the idea of having to tackle more than one objective at the same time, a financial planner can offer advice, strategies and insight you haven’t considered yet. Maybe you think you need to focus on four specific needs at once. However, a financial planner might review your situation and determine that it makes more sense for you to focus on just two goals at this time. Or maybe your current method is creating more work and more stress and your financial planner is creating a strategy that makes it easier for you.
Financial planners can help with a variety of financial issues, including income and debt management, advice on student loans, mortgages and auto loans, retirement planning strategies, job recommendations, investment and more.
You can try searching for a financial planner using Zoe Financialwho can put you in touch with a list of professionals specializing in your concerns.
Another option is to use PlannerSearch.org to find a professional in your state. It will give you a list of CFPs near you, and you can also filter by specialties such as benefits, marriage, divorce, bankruptcy, home buying and more.
At the end of the line
It can sometimes be necessary to have several financial goals, but it can also be very stressful. But by thinking about how you create and prioritize goals, and automating whatever processes you can, you’ll set yourself up to feel more in control and on track to achieve those goals.
Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff alone and have not been reviewed, endorsed or otherwise endorsed by any third party.