Had Enough? Whip Your Financial Life Into Shape

Where to start when you don't know where to start with your moneySometimes you just don’t know where to start. There are all sorts of details to think about when it comes to whipping your financial life into shape — and then keeping it that way. What do you do first? What’s most important?

The details can feel overwhelming if you let them, so it’s imperative to prioritize. And that means prioritizing for what’s important in YOUR life.

Getting started

So where do you start? Here’s one way to go about it. Start by organizing your finances into broad categories, and then prioritize those broad categories based on a combination of both urgency and importance.

Prioritizing based on a combination of urgency + importance will ensure that you don’t miss out on something that’s critically important (but distant) in favor of something that’s super-urgent but maybe not life-changing in the long run.

For example, you can’t ignore your monthly bills, so they are considered urgent, but you don’t want to let taking care of the urgent get in the way of also taking care of other important-but-distant items like retirement.

If you’re really stuck on where to start, here’s a little secret: where you start doesn’t matter nearly as much as making sure you do start. (And then keep going.)

Organize and prioritize

Here’s an example of what I mean. When I started getting my financial life into shape, I essentially organized things like this:

  1. Taking care of regular expenses (minimum payments + getting started with budgeting)
  2. Identifying problem areas (my biggest ones were being in debt and having not having planned for the future)
  3. Fixing problem areas

Once I had my problem areas identified, I categorized them like this:

  1. Debt reduction
  2. Protecting from loss (health & life insurance)
  3. Estate planning
  4. Savings goals (short- and long-term ones)
  5. Investing goals (retirement and wealth-building)
  6. Taxes

Put the plan into action

Then I started working my way right down the list, focusing heavily on one area after another — with a few caveats.

For example, I didn’t wait until I was completely out of debt to begin estate planning or savings. But I also didn’t build up a huge savings account while working on getting out of debt. I “just” built up an emergency fund.

Since I didn’t have very many assets, early on I just made a simple will. Since I was responsible for my (then) young son, I made sure I had life insurance. Since I didn’t want to go broke if we needed medical care, I made sure we had health insurance.

I also made sure to review my tax situation quarterly (since I had a business), in addition to popping receipts for potentially tax-related things into a file throughout the year — and reviewing my taxes annually.

Eventually the problem areas and debt reduction items dropped off the list. Now the estate planning item only needs a brief annual review to see if it needs to be adjusted for changes in circumstance (such as beneficiaries changing, gaining or losing substantial assets, etc.)

The takeaway?

I’ve found that putting a real focus on one broad category after another provides the time to learn and do the things that are necessary to be successful in each area.

The most important thing, of course, is to START. After that, it’s a matter of keeping at it until your financial life looks the way you want it to.