Setting financial priorities has always been a thing for me. As a child, I was taught that if I want something, I need to save for it. Even though I didn’t know it at the time, saving money for that Transformers figure was a financial goal. But financial goals and priorities are two different things. We all have financial goals, but do those goals line up with our priorities? Not always

Obviously, age makes a difference. Students will have many different financial priorities compared to someone who’s about to retire. But regardless of how old you are, figuring out your financial priorities can be difficult. There are so many things out there that we want so how do we decide what comes first? Here are a few that come top to mind.

Pay down any consumer debt

I don’t care how old you are or what’s going on in our lives, paying down consumer debt should always be at the top of our financial priorities list. I’m mainly talking about credit cards where the average interest rate is around 20%, but we shouldn’t ignore your other high-interest debts. There’s no way we’ll end up getting ahead when we’re paying that much interest. Sure we can get by on minimum payments, but it takes only one financial emergency to ruin us. Seriously, we should pay down our debt before we do anything else.

Start saving money

If you’re a student, money tends to be tight so your focus should be on saving over everything else. What I mean is, don’t worry about how to invest your money, just focus on saving. Students tend to have limited money, so instead of worrying about long-term goals, it’s better to start practicing good money management, hence why I suggest saving.

Even if you’re not a student, saving is still necessary, you’ll just have different priorities. Your first savings goal should be your emergency fund. Try to put aside 3 – 6 months’ worth of expenses in case you get laid off some other unexpected expense comes up. It takes time to build that fund up so just set aside a small amount each month. Once you’ve got your emergency fund set up, you can start working towards your other financial goals.

Educate yourself

I’ve always considered education a financial priority. Many people don’t realize that all it takes is a little research to get their finances under control. Sure, my parents taught me some good saving tips, but I really started to get it when I started reading books on personal finance. With just 20 hours of research, I was able to teach myself how to invest. Even if you have no interest in investing on your own, the things you’ll learn will empower you to be better with your money.

Make smart investing choices

Many people are afraid of investing because it intimidates them. Fair enough, but that doesn’t mean you should blindly trust people with your money. I hate to generalize, but there are quite a few advisors who don’t know anything. I know this because I used to work with one who was clueless. Prioritizing your investments has never been easier. You can take the time to learn and become a DIY-investor or you can simply enlist the services of a robo-advisor.

Start spending

I’m not going to sit here and tell you what you should or shouldn’t spend your money on. Honestly, if I need to explain why you shouldn’t buy a car that costs more than your annual salary or a home that you can’t afford, then you might already be a lost cause. I understand that everyone has different financial priorities, but what I do recommend is saving for it first. If you’ve been saving, then go ahead and spend that money on a new TV or trip. Just don’t ignore any other financial goals that you may have such as saving for retirement.

Understanding your finances

You’ll see from above that I believe that understanding your finances is just as important as any savings goals or priorities you may have. Saving money is important, but so is the way you spend it. Below is the Money Saving Challenge from Earnest.com which is catered to “my goals.” The idea is to show you that saving money is a year round thing. By using tools and services available to you such as consolidating or refinancing your student loans, you can save a ton of money!

All you really need to do is assign and allocate your money for this challenge. If you automate things e.g. with automatic withdrawals, it shouldn’t be hard to reach your goals. Earnest is a U.S. based site so if you’re American with debt, you should check them out.