How to Prioritize Your Financial Life


In financial planning, we are taught to “plan” our finances around an uncertain future.  While planning for the future and being a good steward of money and wealth is important, placing too great

an emphasis on either present or future spending can be problematic.  The true essence of financial planning is to find an ideal balance between living for today and planning for tomorrow.  However, with so many competing goals in life, it can be challenging to figure out how to prioritize your financial life.  Would you prefer to live in a more extravagant home or retire 5 years sooner?  Would you be willing to sacrifice discretionary spending on meals or travel to pay for your child’s college?  How much more could you save for retirement if you spent less on depreciating assets like automobiles?  Life is all about trade-offs and understanding the long-term impact of your decisions can help you to prioritize your spending and lifestyle goals.

Develop your personal priorities

Understanding your financial priorities is challenging for many reasons.  First, most people are completely unaware that they are placing less important things in their life above those that are more important to them.  Why, because many of us never stop to quantify what it would take for us to be on track for our goals and how far ahead or behind, we may be.  It is helpful to understand how your choices are interacting with and impacting the achievement of goals.

Have you developed a written list of your goals?  If you are married, have you and your spouse laid out your priorities as a family?  It only makes sense that you would have trouble prioritizing that which you haven’t spent much time thinking about.  Numerous studies including one by the Harvard MBA Program note that only 3 percent of the population have written goals. Why might this be a problem?  According to a recent study by Psychology professor Dr. Gail Matthews, at the Dominican University in California, you are 42 percent more likely to achieve your goals if you write them down.  If you could improve your odds of winning the lottery by 42 percent by implementing something, most people would do it, yet when it comes to setting goals and priorities, many people fail to make goal setting a priority.

Develop S.M.A.R.T goals


Consider taking some time to reflect alone and with your partner/spouse to share your vision for how you want to live, both today and, in the future.  Remember, goals should be S.M.A.R.T – Specific, Measurable, Attainable, Relevant, Timely.  Rather than using vague goals, being specific with your goal helps to improve the chances of achievement because you have total clarity on what you are pursuing.  Measurable goals are those that can be quantified or measured for achievement while Attainable goals are goals with at least a 50 percent chance of achievement.  Relevant goals are generally congruent with many of your other goals and dreams.  For example, it might be difficult to have a goal to be the CEO of a Fortune 500 company if you also have a goal to coach sports for all three of your children.  Finally, Timely goals are those that have a clear and distinct timeline and plan for achievement.   Consider using this process as a springboard to develop both short-term and long-term goals and then begin prioritizing them.  Ask yourself, what is really most important to you in your life.

Next, be sure to balance your saving and spending goals.  Remember, a savings goal is simply a future spending goal in disguise.  Balancing saving for tomorrow and living for today is not easy and often can require professional financial coaching.


True Wealth

When establishing goals and priorities it is also important to base them around your definition of true wealth.  Unfortunately, many Americans focus a large percentage of their time and effort on the acquisition of material wealth.   While many people will agree that having financial stability and success is important, what sacrifices were made on things that might be more meaningful in order to acquire more material wealth? There are always trade-offs in life, but ask yourself what trade-offs were made that may have been manipulated by the importance of wealth? How would redefining your definition of “true wealth” change your priorities in life.  Monetary wealth is simply a tool to help you focus on the acquisition of real meaning and fulfillment.

Prioritizing your financial life is truly a balancing act between competing goals and dreams.  Developing specific written goals and reflecting on your priorities can help you develop your own definition of “True Wealth”.  Since everyone’s situation is unique, consider speaking to your financial advisor to determine the appropriate financial life plan for you.

Kurt J. Rossi, MBA, CFP®, CRPC®, AIF® is a CERTIFIED FINANCIAL PLANNERtm Practitioner & Wealth Advisor.  He can be reached for questions at 732-280-7550,, & LPL Financial Member FINRA/SIPC.