How Do I Prioritize My Goals?

A reader of my newspaper question-and-answer column emailed me in frustration. Most of the articles he read on personal finance seemed to assume that the particular issue under discussion—whether it was saving for retirement, paying off debt, accumulating an emergency fund, saving for college, or buying insurance—was the reader's only priority, or at least his most important one.

But in the real world, he pointed out, people have to juggle their priorities. They may not have enough money to save the optimum amount for retirement while paying off their cards, saving a pile for emergencies and college, and loading up on insurance.

How do you decide what comes first?

My previous book, Deal with Your Debt, goes into detail about how to figure out your priorities. Typically, you'll be trying to achieve more than one goal at a time, and how many you can tackle will depend on your available funds. For most people, though, it should go something like this: