4 Questions to Ask When Prioritizing Your Financial Goals
Setting your financial goals and starting a family are two things that should go hand in hand, in theory. In reality, navigating the routine of your new, hectic life keeps you busy enough. Regardless, this is an ideal time to start planning for your financial future. Here are four questions to consider:
1. How do I budget for my new family and new expenses?
You may have built a budget for yourself back when you started your career. Now that you have loved ones to care and provide for, that budget is going to change significantly. Getting your arms around how your financial obligations are changing can help you identify what income is left over for saving, or even investing.
2. How do I limit my debt?
Carrying some debt is often a necessity, but it can be helpful to eliminate unnecessary debt or debt that carries a high interest rate. If you’re debating whether to pay off a particular loan, consider the interest rate. If it is lower than your potential rate of return from investing the money you’d use to pay off the loan, you might consider investing it. Conversely, if debt on a loan is accruing at a higher rate than an investment would likely earn, it may be worth trying to refinance it or focus on paying it off.
3. What are my most pressing short-term financial priorities?
Identify the most pressing short-term financial goals—paying off a high-interest-rate credit card, making a major purchase like buying a home, establishing an investment account, etc. After identifying those most important short-term goals, you can work to determine the path for achieving them.
4. What long-term financial priorities should I be planning for?
The process of creating a budget, managing debt, and identifying short-term goals can feel overwhelming, but it is also important to think about long-term priorities—saving for college, investing for retirement, etc. These may seem like things to put off, but thinking about them now can help you from falling behind later.