There’s an old saying that I haven’t found the original source to. It goes something like this: “Show me a man’s calendar and his checkbook and I’ll tell you what his priorities are.” Though Gandhi may have said it easier when he said “action expresses priorities.” However you express it, you’re saying that it doesn’t matter what people say is important to them. People spend their money and their time on what actually is important to them.
So what does this have to do with money and retirement? Studies have found that more than 90% of people know that they should save more money for the future. Unfortunately most people don’t save much money. The average person in the US on saves about 5.20%. This means people are barely saving any money even though they all know better. So why is that? Priorities. If you want a secure future. If you want to pay off debts and eventually fund a retirement then you have to make it a priority. It doesn’t work if you just say saving is important then spend your money on things that aren’t important.
What’s stopping you from making savings a priority?
The most common reasons say people say that they can’t save is that they don’t have enough income, they have too many bills, and too many obligations. You do have certain things that you have to spend money on. You also are limited by the amount you make (not really, but that’s the subject of another post). You also have obligations to your kids and others. But are these things truly requirements or are they self-imposed? Look at them to see. If your future is a priority you can make it work.
What does it mean to have a priority?
At the simplest level, if something is a priority then you will make sure it happens. You will put that goal above other, less important things. If something is a priority you will sacrifice the unimportant things to make it happen. Once you have saving and your financial future as a priority you can use that to help make decisions about money.
How to set a priority or goal.
To set a priority you need to set a goal. These should be written down. So grab paper and start writing out your goals. For each goal write what you will accomplish, when you will do it, and how you will do it. For example, “Pay off my credit card within 2 years by putting an extra 200 per month to the bill each month and not charging more on the card.” Do this for anything that you want to accomplish. If you have more goals than time or money you may need to rank them. If you put them in order of importance now while you’re not faced with a question it can be easier to make a rational decision. Then when you’re faced with a situation you can look at your goals to help you decide if it’s worth it.
I recommend writing down any other priorities that you have. Writing down your goals helps make them real. Giving yourself a deadline helps keep you focused. Saying how you’ll do it will give you an actionable plan. Without these things it’s just a dream not a goal.
Make it a priority.
Make these goals a priority. Instead of buying something that you don’t really need, like going out to eat lunch when you could bring your lunch to work, think about your goal. Taking your lunch is cheaper and will make it easier to put the extra money towards your credit card. When faced with a decision like this consciously decide which is more important, your goal or what you’re about to do. You can do this with any decision that affects your goal. If what you’re about to do is more important to you then go ahead, but keep in mind you may be sacrificing your goal to do it.
If you want to have financial freedom, or even if you just want a little extra cash in your account at the end of the month you have to make that a priority. When faced with a decision look at the priorities and goals that you wrote down. Does the decision help you reach your goals or does it take you further away from them. Use that you help you make the right decisions.
Have you set financial goals? How are they work for you?