A Blueprint to Prioritize Your Personal Finances

Money Girl gives you a step-by-step blueprint to prioritize your personal finances. Use these 5 financial priorities to help set goals, leverage your resources, and build wealth as quickly as possible.

Laura Adams, MBA
9-minute read
Episode #414

Financial Priority #5: Consider your goals

But what about goals like saving for a child’s college, starting a business, or buying a home? These are wonderful goals, if you can save for them in addition to funding your retirement and creating financial safety nets.

For a child’s education, consider using a 529 savings account, since it offers nice tax advantages. A brokerage account is the best place to invest money for other types of goals that you want to achieve in about 10 years or so.

Savings for your short-term goals—like buying a car or taking a vacation—that you want to achieve within about a year, should go into a bank savings account. Or, if you want to use excess cash to start paying down your low-interest debts, like student loans and mortgages instead, this is the time to do it.

In other words, once you’ve accounted for retirement, emergency money, dangerous debts, and insurance, how you prioritize spending extra money is up to you. Consider what you value most and make sure your spending is in alignment with your highest and dearest values.

How to Prioritize Your Personal Finances

So the answer to Jacob’s question about what to prioritize is that he should secure his future first by investing about 15% of his income for retirement every year. He didn’t say how much emergency savings he has, but accumulating a bank savings equal to 10% of his annual income would be a wise goal.

Jacob didn’t mention having any dangerous debt, so his next step should be to review his insurance needs with a reputable agent or a financial advisor to make sure he isn’t vulnerable in any key areas. Then he can reevaluate and see how much he can put toward the other goals he mentioned, such as saving for a house, college for kids, and vacations.

I’m hoping he can create enough room in his budget to save some amount each month toward the goals that mean the most to him and his family. And if there isn’t room, he could consider making some big sacrifices, such as downsizing housing temporarily in order to turbo charge savings. Or he could look for a better paying day job or take an additional side job to create more income.

I hope these 5 priorities give you clear direction about how to set wise financial goals, build as much wealth for the future as possible, and make the most of the money you have.

If you're ready for help managing debt, building credit, and reaching big financial goals, check out Laura's private Facebook Group, Dominate Your Debt! Request an invitation to join this growing community of like-minded people who want to take their financial lives to the next level.

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About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.