Chances are, you do multiple things at once throughout the day. Your financial life, just like your daily life, is another area where you may be trying to multitask: pay off student loans while saving for vacation, building an emergency fund and paying off a mortgage, etc- all while maintaining costs of everyday life.
If you feel overwhelmed by trying to meet all these financial goals at once, here are some tips for getting started:
Prioritize Your Goals
When you try to stretch your net income too thin, the result can be frustrating. Rather than trying to do everything at once, start by choosing two goals that should be prioritized. Perhaps you want to choose one short term (saving for a vacation/new car, building an emergency fund) and one longer term (tackling your student loan) to get started. Or maybe you want to choose based on want vs. need.
As you get the hang of things, you can add more goals or switch to a different goal as you reach others.
Follow a Monthly Plan
After prioritizing your goals, next you’ll want to create a plan for reaching them. To do this, look at what you bring home every month and give those dollars a “job.” This article from Money Under 30 suggests using a 50/30/20 rule for your monthly income, for needs/wants/savings. A more relaxed version of this rule from Lifehacker is the 50/15/5, for needs/retirement/savings, and you can use the other 30% however you want. Whatever you decide should correspond with your lifestyle and, as mentioned earlier, shouldn’t create a strain in other areas of your financial life.
Choose a Way to Save
If you have goals that are savings-focused rather than payment focused, you have a few options for setup. For your short term goals, you probably want your money to be easily accessible, like in a savings account. However, for a longer term goal you may want to consider a more specialized account, such as an IRA or CD (both of which bear interest). Oak Bank offers a variety of personal deposit accounts that can help you reach various goals, whether it’s short term or long term. For more information and inquiries, click here.
Make it Automatic
When you decide how to save your money, make it an automatic payment every month (many banks like ours allow you to set this up online). You can also usually set up automatic payments for student loans, mortgages, and other types of repayments you may have. Making the minimum amount due (or minimum amount toward your goal) automatic means you can avoid late fees if you tend to be forgetful, but also helps you stay on track without having to spend too much time remembering when you need to pay certain bills. If you decide you want to pay extra a particular month, most services allow you to either edit your usual payment or make an additional one-time payment.
Find Other Ways to Save Or Earn
Finally, you’ll reach your different financial goals faster if you redirect some of your current cash flow. Saving money in your needs/wants categories means extra money to add to your emergency fund, for example. Switch cell phone carriers if you find a similar offer at a better price, call around for different auto quotes, walk or ride your bike to work when it’s nice out- these small changes add up! To help you find ways to save, here are some of our past posts on cutting costs in areas of everyday life:
Another approach, especially when you can’t make any more changes to save more money, is to earn extra money. You can accomplish this with a part time job or side business. Side Hustle School can give you ideas of setting up a side income independent of your job.
Multitasking, like any kind of juggling, can feel chaotic… but once you find your rhythm, it’s a pretty cool thing to know how to do.