How to Juggle Multiple Financial Goals at the Same Time
If you are like me, you are going after multiple financial goals simultaneously. It can be a little bit overwhelming and sometimes discouraging. It feels like there's not enough money for all the things you want to save for, invest in, or pay off debt.
However, it is possible to juggle multiple financial goals, and I want to go over a few steps to make it easier for you.
When it comes to financial goals, there are four main things that you can do with your money. The first one is saving money. So a big thing here would be your emergency fund or savings for a home's down payment.
Number two is paying down debt. Of course, this involves any sort of debt. Your car loans, student loans, personal loans, and credit card debt.
Number three is investing your money. This could include retirement plans like a 401K, a Roth IRA, or your brokerage account.
Number four, spending money, tends to go hand in hand with saving money because, a lot of times, people want to save money to be able to spend money on something specific. So maybe you are saving up money to travel or saving up money to make a bigger purchase.
Often we have multiple goals under one of those categories, so we end up with tons of goals to try and go after in a month, a quarter, a year, in our lifetime, and it tends to get overwhelming. Let's break this down step by step.
Determine your goals
I think goal setting is fun. That's the easy part. Some people don't like setting goals, but it's fun to go after something, especially financial goals.
It is just very straightforward math, and I love that about financial goals. If you want to save $1,000 and put $100 to that per month, you will reach that in ten months. So write down your goals and get that out of the way.
Prioritize and evaluate those goals
Which of those goals that you wrote down are the most important to
you? This part is pretty important because this is very situational. It depends on the happenings in life. Because of the timing of things, you may prioritize one of your goals over another.
It is unique to every single individual. Whatever it is that you want to prioritize is entirely up to you. For example, saving up an emergency fund of X amount of dollars may be more critical than saving to travel as we go into a recession.
Determine a timeline
I know I kind of jump to step number three pretty quickly, but that's because steps one through three all tie in together. If your goal is to save $6,000 in an emergency fund in 2023, you want to do this in a whole year. So your goal is to save $6,000 as an emergency fund is your number one priority, and the timeline is one year.
Choose and stick to a method when it comes to your goals
Plan how you're going to do this because there are a couple of ways you can go about doing things.
There is the one-thing-at-a-time approach: first tackle one goal and then move on to the next. The second method is to work toward multiple goals at one time. Even if you're doing the first method, where you're focusing on one goal at a time, there's still going to be a little bit of a mix of method two, depending on your financial situation.
Pros and cons of different methods
I do want to share some pros and cons of these two methods.
Pros and cons - method one
So again, method one is where you're working and prioritizing one goal and then moving on to the next. The first pro of this method is that you will reach one of your goals faster, and then you can move on to the next one. You may be able to tackle your goals in a pretty quick manner this way. This is also less overwhelming because you don't have to worry about too many things.
The cons here is that there can be a significant opportunity cost. For example, if you are only prioritizing your emergency fund or only prioritizing paying down debt and you're not investing or if you're not saving, whichever one is the opposite of it, if you're not doing it, then you are losing that no matter what.
There will always be a trade-off when you choose one and heavily focus on it.
Pros and cons - method two
Now with method number two, where you're paying a little bit to each of your goals for the year or quarter, whatever you're working toward regularly, there are pros and cons.
The number one pro is that you're getting closer to your goals. You're getting closer to achieving all those goals, which is pretty impressive. The other pro here is that you're dollar cost averaging across all of your goals, which that's typically a term you would use for investing. You're putting your money in, letting the time work for you, letting your money work for you.
The con with this method is that you will not reach any of your financial goals as quickly as possible with the one-at-a-time method. It will progress slower because you're spreading your money between multiple things.
Multiple financial goals
Do you have multiple financial goals? Comment below what your big goals are for 2023. Have patience and a plan, and you'll see your financial goals achieved.