You want to save more money.
You want to pay off debt.
Christmas is coming.
Your car isn’t going to last forever.
You’d like to take a vacation next year.
And you know you should be thinking about retirement too.
All of those things matter.
But you probably don’t have enough extra money each month to make significant progress on all of them at the same time.
So how do you decide what comes first?
Start by making sure you have some money in savings. Then look at deadlines, urgency, and stress. Consider when you’ll need the money, what could happen if you wait, and which part of your finances is creating the most pressure. From there, you can decide which financial goal deserves your primary attention.
You can have several important financial goals without making all of them your priority right now.
Why Trying to Do Everything at Once Can Keep You Stuck
When everything feels important, it’s tempting to put a little money toward everything.
A little extra toward the credit card.
A little into savings.
A little toward the next car.
A little toward Christmas.
A little more toward retirement.
You’re doing a lot of good things with your money. But when your extra money is spread across so many different goals, it can feel like you’re not making much progress on any of them.
Instead, I usually recommend choosing one primary financial goal and directing most of your available extra money toward it.
That doesn’t mean you stop preparing for everything else.
You still need to make your required debt payments. You may need to save for expenses you know are coming. You may continue contributing enough to retirement to receive an employer match.
But before you decide which goal gets to be the priority, make sure you have some money in savings.
Start With Some Money in Savings
If you have little or nothing in savings, I recommend starting there before you begin aggressively paying off debt.
One of the first questions I ask clients is:
How much money would you need in savings to feel comfortable right now?
We aren’t necessarily trying to build a three-to-six-month emergency fund at this point.
We’re trying to create enough of a cushion that an unexpected expense doesn’t immediately have to go on a credit card.
Ideally, I like to see at least $2,000 to $3,000 in savings to start. But the right amount depends on the person and their circumstances.
Having some money set aside gives you protection while you work on paying off debt or making progress toward another financial goal. It also helps keep an unexpected expense from undoing the progress you’re making.
As your debt comes down or is paid off, you can shift more of your focus back to savings and work toward a larger emergency fund.
Once you have that initial cushion in place, look at deadlines, urgency, and stress to help decide which financial goal deserves your attention next.
1. Deadlines: When Will You Need the Money?
Some financial goals have a definite date attached to them.
Christmas needs to be funded by December.
If you’ve already scheduled a vacation for October, you know when you’ll need the money.
If your car will probably need to be replaced soon, when do you realistically think that will happen?
A deadline changes the way you plan.
If Christmas is six months away, for example, you can figure out how much you need to start setting aside so you’re ready when December arrives.
But having a deadline doesn’t automatically make something your primary financial goal.
You may need to put money aside for Christmas while still keeping your main focus on paying off a credit card.
Planning for those deadlines helps you prepare for what’s coming without abandoning your bigger financial goal every time another expense gets closer.
2. Urgency: What Needs Your Attention Now?
Not every financial goal has a firm deadline.
Sometimes urgency comes from what will happen if you wait.
Maybe you transferred credit card debt to a 0% interest card and the promotional period is about to end.
Maybe your car is becoming increasingly unreliable.
Maybe waiting could cause you to take on more debt or make the situation more expensive.
But urgency doesn’t always come from a deadline or a financial consequence.
It can also come from stress.
Something that doesn’t look urgent on paper may feel very different in your actual financial life.
Ask yourself:
What needs my attention sooner rather than later, and why?
The answer can help you see which goal may need more of your attention.
3. Stress: What Is Weighing on You the Most?
Which part of your financial situation is creating the most stress?
Maybe you’re tired of carrying a credit card balance and thinking about it every month.
Maybe having very little in savings makes you nervous because you know one unexpected expense could force you to take on more debt.
Maybe your car has 200,000 miles on it, and you’re constantly wondering how much longer it’s going to last.
The numbers matter. But so does the amount of pressure something is creating in your life.
Two households with similar incomes, savings, and debt could have completely different financial priorities because their circumstances are different.
Sometimes stress also creates urgency.
The goal isn’t simply to work on whatever worries you the most. It’s to understand what that stress is telling you about your financial situation.
Deadlines, urgency, and stress often overlap. Looking at all three can help you decide what deserves your attention now and what may be able to wait.
Keep Planning for Expenses Along the Way
Focusing on one primary goal doesn’t mean ignoring everything else.
Christmas still comes while you’re paying off debt.
Your car still needs maintenance while you’re building savings.
Insurance premiums, school expenses, travel, home repairs, and other expenses don’t disappear because you’re focused on another goal.
That’s why your spending plan and your financial goals need to work together.
Planning for the things you know are coming helps keep those expenses from interfering with the bigger goal you’re working toward.
How to Decide Which Financial Goal to Focus on First
Once you’ve looked at your savings, deadlines, urgency, stress, and upcoming expenses, choose the financial goal that needs the most attention right now.
Maybe it’s paying off a credit card.
Maybe you realize you need more money in savings before you’re comfortable focusing heavily on debt.
Maybe replacing your car has become more important than you originally thought.
Whatever you choose, make the goal specific.
“I want to pay down debt” can feel endless.
“I want to pay off this credit card” gives you something concrete to work toward.
The same is true for savings. Instead of simply wanting to “save more,” decide what you’re saving for and what you want that savings to accomplish.
If saving money has felt impossible, it may also be worth looking at whether your money is continually being pulled toward expenses that weren’t included in your plan.
Having one clear priority makes it easier to see your progress and know what you’re working toward.
What About Retirement?
Retirement is important, but it’s a long-term financial goal.
I don’t necessarily treat it with the same urgency as every short-term goal.
If you’re carrying significant consumer debt, for example, it may make sense to focus more heavily on reducing that debt before substantially increasing retirement contributions.
That doesn’t necessarily mean stopping retirement contributions, especially if you’re receiving an employer match.
There are different seasons for different financial priorities.
As your debt comes down or is paid off, you can shift more of your attention toward retirement, building a larger emergency fund, and other long-term goals.
Your Financial Priorities Can Change
The goal that’s most important today may not be the goal that gets your attention six months from now.
Life changes.
Your income changes.
Your car starts having problems.
A baby is coming.
You pay off a debt.
You finish saving for an upcoming expense.
When something significant changes, it’s worth looking at your priorities again.
Changing your priority because your circumstances changed doesn’t mean the plan failed.
It means you’re adjusting the plan to fit your life.
You Don’t Have to Do Everything at Once
When several financial goals are competing for your money, figuring out what comes first isn’t always as simple as following a predetermined list.
Your savings matter.
Your debt matters.
The expenses you know are coming matter.
And so do the things creating the most financial stress.
Looking at deadlines, urgency, and stress can help you sort through those competing priorities.
You don’t need to make significant progress on everything at the same time.
You need to know what deserves your attention now and what can wait.
Frequently Asked Questions About Prioritizing Financial Goals
Should I save money or pay off debt first?
If you have little or nothing in savings, I recommend building a small savings cushion before aggressively paying off debt. Ideally, I like to see around $2,000 to $3,000 to start, although the right amount depends on your circumstances and what makes you feel financially comfortable.
How many financial goals should I work on at once?
You can have several financial goals, but you don’t have to make all of them a priority at the same time. Continue planning for expenses you know are coming while choosing one primary goal for most of your available extra money.
How do I decide which financial goal is most important?
Look at deadlines, urgency, and stress. Consider when you’ll need the money, what could happen if you wait, and which financial issue is creating the most pressure. Those factors can help you determine what deserves your attention first.
Need Help Deciding What Comes First?
If you have several financial goals competing for your money and you’re not sure which one should come first, that’s something I help clients work through.
We’ll look at your entire financial picture, what’s coming up, what’s creating the most stress, and what needs your attention now.
Then we’ll create a plan that gives you a clear place to start and helps you know what comes next.
