How Do You Balance Multiple Financial Goals?

Photo by Glen Carrie on Unsplash

I’ve started to put together my budget for February, and — as I suspected I would — I’m going through the list of items I originally thought I would get for my apartment and scratching them off because I’ve lived in this place for two months without them, which means I don’t really need them.

Of course, I currently love everything in my apartment, from my electric kettle to the wire bin by my desk where I put the mail, and if I hadn’t already purchased the wire bin or the desk organizer or even the coffee table, I might be telling myself right now that, since I’d lived without these items for two months, they weren’t actually needs.

And yes, “doing without” is my particular proclivity and you’ve heard me write about it way too many times on The Billfold — hello, Ikea’s second-cheapest sleeper sofa — but there are a lot of things I want to do with my money this year, and this type of economizing is one of the ways I make all of those other things work.

Which brings me to this week’s Money Mom column at The Cut. The letter writer’s question has a fairly straightforward answer — yes, you should be building up your emergency fund while you pay down your debt; putting all your extra money towards your debt means you might end up going back into debt if you have an emergency — but I appreciated Charlotte Cowles’ description of all the things we’re supposed to be doing with our extra cash:

It took me years to wrap my head around the different areas that I needed to construct simultaneously: an emergency fund, a long-term savings account, a solid 401(K) plan, an investment portfolio, a “backup” fund to make sure I never carried a balance on my credit cards — and the list is still growing.

Right now I have the emergency fund, the “backup” fund (my checking account buffer, which is nearly refilled after I depleted it during my move), the retirement funds, and the investment portfolio.

I don’t have a separate long-term savings account for items like vacations or down payments, though — I’m putting all of my savings into the same account and categorizing it as “emergencies and/or big-ticket items.” My investment portfolio currently consists of a single share of an ETF; at 5 percent of my income, it’ll take me nearly a full year to set aside the $3K required to access some of Vanguard’s low-cost index funds.

It’s overwhelming to think about everything I need to be doing financially, first from the “allocating the money I have” end and second from the “growing my career” end. (When I wrote that I wanted to do a lot of things with my money this year, I specifically meant “publish my second novel and do another book tour.”) Add in the “where I want to be in five years” factor — like, um… do I want to buy one of those loft condos down the street? — and it’s enough for me to develop an “I’ll think about it next year” category.

Which is pretty much what I did re: personal investing, until I finally made a plan and committed to putting 5 percent of my income towards investing in 2018.

And I was only able to do that because three years ago I made a plan to set aside 10 percent of my income for savings and 20 for debt repayment. (I am still debt free, thank goodness!)

So maybe these financial goals that Cowles lists are less “simultaneously” and more “in stages.” Start building up your emergency fund as you pay off your debt. Then make sure you have enough money in your checking account that you can pay unexpected expenses without resorting to credit cards (or your emergency fund). Then figure out the investing piece. Then start saving for your next big life expense. Or… you know, in whatever order you want to put those stages.

How do you handle all of these competing financial goals? Do you ignore some in favor of others? Do you build up a plan to put little bits of money towards every goal? Or do you tell yourself you’ll start on the next goal as soon as you’ve completed the current one?

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