Financial Wellness: Priorities keep eyes on prize

The secure login screen for one of our investment accounts includes a photo of a tranquil lake scene.

For us, it’s also motivational.

In previous columns, I’ve written how certain things aren’t priorities for my family’s budget, such as dining frequently at fine establishments or salon visits to color my newly gray strands.

So what is a priority for our family’s finances? Our future, including owning a lake cabin one day.

To get there, my husband and I each put money into our individual retirement accounts monthly, and also make an automatic additional principal payment on our mortgage.

Every other week, we set money aside in a car fund with the goal of paying cash for our next new-to-us vehicle, and we stash some in an online money market account meant to fund our next vacation.

We put a bit of money into each of the kid’s college funds every month, too. While helping pay for their college educations is a priority, it’s lower on the list.

Priorities are key for good money management. They keep you on track, especially if you’ve got money burning a hole in your pocket. They help us allocate the “extra” money, whether it’s the monthly difference between our paychecks and payments, or an occasional gift or bonus.

Personal finance author Dave Ramsey’s seven baby steps offer a good framework for financial priorities. They’re meant to be done in order, with each one being accomplished before tackling the next:

1) Save up $1,000 in case of an emergency.
2) Pay off all debt except the mortgage.
3) Save a 3- to 6-month emergency fund.
4) Contribute 15 percent to retirement accounts.
5) Contribute to college savings funds.
6) Pay off your mortgage.
7) Build wealth and give.

While simple and sound to follow, the baby steps aren’t a one-size-fits all solution, in my opinion. We contributed to retirement and college funds before having all of my husband’s (low-interest and tax-deductible) student loan paid off. Once it was, we allocated the money we had been putting toward that loan to another financial goal.

No family’s priorities are going to be the same. What might seem wasteful to me may be your raison d’être. But there are some general guidelines that are good to follow when you think about how you can – and should – be spending and saving.

First, realize you must earn enough to cover everything you need. Sometimes that requires earning more. Other times, it means redefining what you “need.”

Second, recognize you’ll probably never have enough money to do everything you want. Decide what truly matters, what you really want to accomplish, and what finances it will take to get there.

Third, remember that saving for the future, near and distant, isn’t optional. It’s not “nice to do.” It’s necessary. Pay yourself first.

With those basic truths in mind, you can start to think about where you want your dollars to go.

Sherri Richards is a thrifty mom of two and Business editor of The Forum. She can be reached at