Let's face it: a lot of things you spend money on aren't very fun. It's not like you show off your car's new brakes on Instagram or rave about finally getting your student loan debt under the six-figure mark. So it can be difficult, when you're dealing with a finite amount of money, to feel good about funneling so much toward these unappealing goals when you'd rather spend money on a vacation, a new car, or dinner with friends.
And all the experts who advise skipping small indulgences, like your daily latte or avocado toast, may be missing the mark. “The whole idea of rice and beans, beans and rice is cool in theory, but it’s just not realistic,” said financial expert Aja Dang on a recent episode of Confidential Money podcast. Dang ran out on the savings front after saving to pay off credit cards, a car loan and a student loan. “I didn’t feel excited about everything I had achieved, so what I started doing was saving money to treat myself – like a really nice dinner or my first goal was laser hair removal.”
So how do you decide how to prioritize your financial goals when you have so many options and some seem a little less exciting than others? Start with these tips.
Decide what is important to you
Your priorities may not match what financial experts suggest—or what your friends are doing—but if something is extremely important to you, keep it in your budget. “It’s your money, it’s your journey,” says Dang. “You need to think about whether it's important enough to replace that money going to something that's more of a quote-unquote necessity, right?”
So, if brunch with friends on the weekend is essential to feeling good, set aside a small amount of your budget for it. Just don't go overboard – you don't want to justify all the potential expenses and end up not reaching any financial goals.
Focus on one main goal at a time
It may seem like a good idea to put a little money here and a little there – a little to save, a little to pay off your student debt – but it can be more effective to focus all your efforts on completing one goal and then moving on to the next. close with that feeling of accomplishment.
“I've worked with hundreds of people trying to pay off credit card debt who pay a little more on each card every month instead of putting all the extra money on one card at a time,” says Lauren Anastasio, CFP and chief financial officer. advice on Stash. “By choosing a priority and putting all your energy into it, you can stay focused and achieve your goals sooner.”
Be specific about long-term goals
“Thinking about the future and imagining what it would be like to live your dream life is essential to kickstarting yourself and starting to prioritize saving for it,” says Julia Carlson, founder and CEO of Financial Freedom Wealth Management Group. “If you have a big dream – house, retirement or vacation – that attracts you with every dollar invested, you will start to be excited about seeing your money grow to achieve your goal.”
You might want to consider creating a vision board or making your screensaver something that keeps you top of mind – so your eyes are always on the prize.
Consider interest rates and returns
“Prioritize based on the type of debt you have,” suggests Anastasio. “If you have high-interest rate debt, such as credit card balances, you will benefit from focusing on paying it off in full before you start putting money into an investment account. The amount of interest charged is likely significantly more than what you can expect your investments to return in the same period of time. If you have a low interest rate car loan or a student loan, you may feel comfortable continuing to make the minimum monthly payment and put all your extra money to invest. ”
Pause before purchasing
“Pause before making a purchase, especially if you are buying online”, recommends Anastasio. “You may be very tempted to take advantage of discounts; So if you are about to click the checkout button, step away and revisit the site later. You can even try setting an alarm to revisit in 24 hours – you may find the excitement and temptation to spend are gone the next day.”
Give yourself a break if you go off plan
“It's easy to beat ourselves up if we stray from our budget or accidentally overspend on a night out or holiday shopping,” says Anastasio. “Managing your money is a skill you are developing for the rest of your life, not a one-time endeavor. By being kind to yourself when your financial habits are imperfect, you will avoid unnecessary financial anxiety or stress.”
