It’s an age-old financial dilemma: you want to save for the future—maybe to better prepare for retirement or to help pay for your kid’s college education—but you’re dealing with today’s bills.
So how do you strike a proper balance and juggle current obligations while simultaneously saving for the years ahead?
Here are three strategies to use when you need to pay today’s bills but still want to plan for your financial goals the future.
1. Prioritize your future financial goals:
Too many people get overwhelmed with their finances because they feel like there are too many issues to tackle. You might need to pay off your credit cards, improve your credit rating, get life insurance, create a will, save for retirement and more.
Your financial “to do” list could go on and on. But instead of stressing over the number of items on your list, put each item into various categories based on when the goal needs to be accomplished.
In reality, it may not be possible to do everything at once—nor is it necessary. So instead of fretting over everything, place each future goal into a “bucket” based on whether it’s a short-term goal, a medium-range objective or a long-term mission.
For example, if you want to boost your credit score in six to 12 months, that’s a short-term goal. But if you want to amass a down payment for a new home, that effort could take two or three years of diligent saving, making this a medium-range objective. On the other hand, setting aside funds for your five-year-old daughter’s future college tuition is a long-term mission.
Each aspiration is significant and requires you to earmark money toward the goal. And since your funds aren’t unlimited, you’ll likely have to focus on these things first, letting other, less pressing matters take a back seat to your primary goals.
By prioritizing in this fashion and considering what is most important, you’ll relieve some of your mental financial stress and be best positioned to act on your main goals.
Continue reading my article, How to Juggle Today’s Bills and Still Plan for the Future on Oprah.com.