Managing Multiple Financial Goals at Once


Managing-Multiple-Financial-Goals-at-Once-by-Max-Jaffe_image-268x300In this world of multitasking, it seems appropriate that if we work on multiple things at one time, we can also be working on multiple financial goals at once.

First of all, goals can be divided into three terms: short, medium and long. A short-term goal is one you would like to accomplish within a year; a medium-term goal is one to be completed within five years; and a long-term goal is one to be completed within 10 years or even longer.

There are three important financial goals you can work toward simultaneously. As you complete each one, you can continue to work on the goals that are left. These goals are saving for retirement (long-term), paying off your credit card (medium-term) and establishing an emergency fund (short- to medium-term).

Why have these three goals been lumped together? The rule of thumb is that 15 percent of your gross income should be used for retirement. However, if you have credit-card debt and don’t have an emergency fund, then we need to work on those first, and they should be done simultaneously.

Paying off your credit card

This is the likely the most important financial move you can make. If you’re paying 18 percent interest on your credit card, your balance would double in four years if you didn’t make any payments. Of course, making no payments is an unlikely scenario, but this example demonstrates how dramatically interest can add to your balance. In turn, it demonstrates how important it is to pay off your high-interest debts. If you don’t pay them off, they can keep you from accomplishing other goals.

Creating an emergency fund

While getting out of credit-card debt is important, so is having an emergency fund. Your emergency fund should be created while you’re paying off your credit card. The reason is that an emergency expense can cause you to incur more debt, even after you’ve paid off your credit card.

How will you know when your emergency fund is adequate? When you have the amount it would take to cover your expenses if you lost your current job and had to find another. If you think it’ll take you three months to replace your current job, then you need three months’ worth of expenses in a liquid account. Liquid means you can go to the bank right now and withdraw your funds.

Saving for retirement

Let’s face it: you want to be able to provide for yourself in retirement. Once your credit-card debt is paid off and your emergency fund is adequate, then the entire 15 percent of your gross income you’ve been directing toward those goals can go toward retirement. If your company offers a 401(k) with a match, you need to take advantage of that at all times. If you don’t contribute enough to receive the full match, you’re leaving free money on the table.

So, how do we accomplish all three of these goals at once? Take 15 percent of your gross income. If your company matches 6 percent of your gross in the 401(k), then 6 percent goes to your 401(k) account. The remaining 9 percent can then be used for paying off your credit card and establishing an emergency fund. You may parse that 9 percent any way you choose. For instance, 2 percent of your gross can go to the emergency fund and 7 percent can go to paying off your credit card. When your credit card is paid off, then the entire 9 percent goes toward your emergency fund until it reaches its required amount. At that point the entire 15 percent goes toward retirement.

Try this new way to multitask; get started today!


Max Jaffe, founder and CEO of Spending Solutions, Inc., teaches people how to handle their money in everyday life. He is a CPA and the author of Maximizing Your Money. He also conducts money workshops at conventions and corporate meetings.

Max Jaffe – who has written posts on CashNetUSA Blog.

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  1. Posted by Mel Thompson, at Reply

    I agree with you that credit card debts are high interest debts and that interests accumulate rapidly when you fail to pay on time. Your advice to make it a priority is good however, this could apply only to those who has the capability to pay. But this is not the reality for a lot of people. I see a lot of people coming for help because they cannot simply pay their debt because of their dire financial situation.

  2. Posted by, at Reply

    My wife and I are working on three main financial goals:
    1. Paying off our student loans
    2. Saving to adopt two kids internationally
    3. Saving for a comfortable retirement

    We don’t have any credit card debt and I think the key for us is prioritizing our goals. Completing one (we are close to paying off our loans) gives us huge momentum toward working on our next goal.