One of the critical keys to effectively changing your life is prioritization. No one has unlimited resources. Depending on your personal situation, you may be limited by time, money, or energy. Most often, it’s time and energy that are in short supply. Therefore, it only makes sense to focus your resources on creating the financial habits that will have the most significant impact on your situation.
Try this process to focus on your most important new habit:
First, Identify Your Financial Pain Points: Ask yourself, where are you feeling the most pain in your financial life? What keeps you up late at night?
- Is it the lack of savings?
- A non-existent emergency fund?
- Too little income to pay your bills each month?
- A bleak retirement future?
- Or is it something else?
Addressing the most stressful financial challenge in your life is the best way to make the most progress quickly.
Next, Determine the Most Impactful New Habit:
Knowing that you need to work on your savings doesn’t necessarily highlight the optimal habit to adopt. Consider the impact each potential new habit would bring to your life.
To do this, you will need to:
Brainstorm Potential Habits: Make a list of all the potential habits you could build that are related to your target financial concern. This is a brain dump for your financial goals.
Prioritize Your List: Prioritize your list based on the likely outcome of incorporating that habit into your life. Eliminate the bottom 80%.
Evaluate the Top Habits: Reexamine the 20% that remains. Visualize the impact each of the remaining possibilities will have down the road 1 month, 6 months, 12 months, and 5 years down the road. How will the habit impact your life 25 years from now?
Make Your Choice: Choose the habit that makes the most sense after carefully considering the future. If you’re torn between two or more habits, consider which would be the easiest to implement. Never underestimate the power of momentum. You can swing back around and pick up the other habits in the near future.
Third, Start with Achievable Goals:
Bring all the parts of your finances up to an average level before attempting to be a high achiever. The worst aspects of your financial life are causing your greatest financial discomfort. In other words, the best course of action is to:
- Work on eliminating consumer debt.
- Make sure you have an emergency fund.
- Try to save at least 10% of your income.
- Always have adequate insurance in place.
- Consistently save for retirement.
These actions need to be the main priority before worrying about the purchase of a vacation home or the installation of a swimming pool.
Then, Assess Feasibility:
Do you have what you need to put the habit into place? If not, can you get what you need or start small enough that the habit is viable? For instance, if you’re 75 lbs overweight and spend every evening on the couch, you’d have to start small if your desired habit was to run 10 miles each day. You’d need running shoes, too.
Some financial habits might require you to gain a significant amount of knowledge or have a starting point that is currently beyond your reach. This would be the case for things like investing in the stock market or buying real estate as an investment. Make sure to determine if the habit is possible with your available resources and expertise. It’s possible another goal might be more appropriate based on those current limitations.
Finally, Manage Your Time Effectively:
Time is a limiting factor for everyone, and there are only so many hours that can be applied to building and performing a new financial habit. Ensure you’re spending your time wisely and effectively. The most important habits are often the least appealing. Focus on positive habits to best enhance your finances.
By following these steps, you can effectively prioritize and establish financial habits that will lead to a more secure and stress-free future.
Smart Life Savings Planner
Are you ready to take control of your financial future and achieve your financial dreams? Welcome to the Smart Life Savings Planner, your ultimate guide to setting and achieving SMART financial goals. Whether you’re aiming to build an emergency fund, save for a major purchase, or plan for a comfortable retirement, our planner is designed to help you every step of the way.
