Are You Good at Financial Multi-tasking?

Recent studies have shown that multi-tasking, or trying to do multiple things at once can be bad for your health, raising cortisol levels and distracting your mind from completing things in an efficient manner.  Financial multi-tasking can be similarly problematic, with many people in a situation of having to deal with multiple financial goals such as retirement, children’s education, and mortgage payments.  To keep things on track, I try to separate goals based on urgency and priority:

–First, I make sure that the emergency fund is well-stocked– this includes restocking when the fund is spent down.  The emergency fund will help safeguard your other savings and investments against unplanned withdrawals, and also help with peace of mind.

–For the next savings goals, I arrange them based on priorities — including looking at other sources of financing if required and any time urgent bases.  If you have credit card balances at high interest rates, paying this down should be the top priority.

–In saving for multiple goals, I decide on a pre-allocation before the money arrives – in other words, for monthly paychecks, I would decide on an amount for the travel account, for the investment account, and for other things we are building savings for, such as a vehicle.  These instructions are then put into the online banking account so that they are transferred automatically.  I tend to do large scale rebalancing (changing the percentages) each year.

shared at this week’s Carnival of Personal Finance