Set your financial priorities

When one thinks about the most expensive thing he or she will buy in a lifetime, items like a home, car, and education come to mind. However, you might not realize the most expensive and, arguably, the most important thing you will purchase in your lifetime is your retirement. You are saving a “nest egg” today for the cost of retirement tomorrow.

I often refer to author Stephen Covey’s popular presentation, during which he places a bag of small pebbles into a container, then has someone try to fit a number of larger rocks in – they do not fit. However, when Covey reverses the order and has the volunteer put the larger rocks in first and then has him add the smaller ones, there is room for everything!

You see, the small pebbles represent the aspects and objects of lesser importance in our lives, while the larger rocks represent what each of us decides is the most important. The message is both simple and powerful: determine what your priorities are, do the important things first, and the rest will fall into place.

Below are a few common personal finance missteps to avoid and, in turn, allow yourself to save more:

  • Not budgeting
  • Not saving a set amount
  • Keeping all money in checking
  • Not taking advantage of employee benefits
  • Withdrawing from retirement accounts before retirement
  • Assuming you are too young/old to invest
  • Not asking for a raise
  • Upon receiving a raise, spending it (Why not save the next raise or bonus?)
  • Living beyond your means
  • Impulse shopping

I believe a lesson learned from the most recent financial crisis is the severity of leverage. Be careful how much you borrow relative to income and the value of your assets. At times, we overextend ourselves and do not save enough.

Jason Lacey, CFP, is a portfolio manager and financial planner at PJS Investment Management in Cedarburg.

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