Saving for emergencies, getting out of debt, saving for retirement, funding your child’s college, and saving up to pay for a vacation are all good things to do with your money. But if that is the case, how come we hardly do any of them?
Because we try to do all of these things at once and we become scattered with our money. Our money is finite so when we spread out our finances $15 here and $25 there, we are not doing anything necessarily bad. But the problem is that we do not make any inroads in one area so we get frustrated and eventually quit and decide to do nothing.
But being focused and putting all your money and energy into one task will actually get you to where you want to be financially. That is why we advise having a step by step financial plan of first saving $1,000 in the bank. Then pay off all your consumer debt, smallest to largest. Next, bump up your emergency fund to six months’ worth of expenses. After that you are then ready to start to contribute to your 401(K) or IRA and save for your future years. Finally, you will then be in position to save money for purchases that you desire as well as save for your children’s college and pay off your mortgage!
It might seem counterintuitive, but just doing one thing at a time will allow you to be more productive then doing five different things at once, getting stuck and ending up doing nothing. So sit down and take a look at your spending today. If you are doing several different things with money currently, prioritize them and focus on completing one task. In the end you will end up a lot further ahead and be able to realize your financial dreams.