i don't have enough money

Except for the very top one-tenth of one percent of us, it’s the rare person who can afford it all at once.

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If you’re in that rarefied group, you don’t need to tướng read any further.

If you’re not, this one’s for you.

Your Big Financial Goals

For most of us, here are the typical big financial goals we strive to tướng achieve.

  • Pay off debt (credit cards, student loans, tự động loans, mortgage, etc.)
  • Build your emergency fund
  • Put your kids through school without overwhelming student-loan debt
  • Buy a home
  • Save and invest for retirement

Your specific mix of these will be different than vãn mine. You probably have more or less debt than vãn I tự. You may have no savings for an emergency or you may already have phối aside enough to tướng cover more than vãn a year of expenses. You may not have any kids or they may all have already graduated from college. You may still be staring at multiple hundreds of thousands of dollars in the full cost of college attendance for several kids in the coming years. You may not have bought your first trang chủ yet or you may already own it không tính phí and clear. You may have not yet started saving and investing for retirement or you may have already amassed all you need to tướng cover your comfortable retirement.

However, if you’re still reading here, it’s a given that whatever the particular mix of financial goals you want to tướng attain, you can’t fund all of them at once.

Prioritizing is the name of the game.


A famous psychological paradigm called Maslow’s Hierarchy of Needs is built lượt thích a pyramid. “Needs lower down in the hierarchy must be satisfied before individuals can attend to tướng needs higher up.

Maslow started with physiological needs: food, water, warmth, rest (if you’re an astronaut, you’d put air in front of all those). Next, safety needs: physical safety and personal security. Then Maslow proceeded to tướng list psychological needs such as belonging and love, esteem, and self-actualization.

Similarly, when considering how to tướng allocate your money, there are needs you must attend to tướng first, then other needs, and only once all needs are attended to tướng can you proceed to tướng your wants.

Maslow-Like Money Needs
A Maslow-like hierarchy of financial priorities

Current Physical Needs

Your priorities start with making sure you survive today and tomorrow.

This includes not just food, water, and shelter, but also anything you have to tướng pay for to tướng be able to tướng bring in the income that provides those. That could be a xế hộp if you must commute to tướng work and public transportation isn’t a good option. It could also include equipment and supplies if you have to tướng provide those (e.g., if you’re a freelancer).

Near-Term-Future Needs

Once that’s covered, your next batch of money can be allocated to tướng building an emergency fund and paying off high-interest debt such as payday loans, credit cards (that don’t offer a 0% teaser rate), and private student loans. The emergency fund is ví you don’t lose your ability to tướng cover the first tier if something goes badly wrong and paying off high-interest debt is ví you’re not constantly hemorrhaging money due to tướng such high interest.

Your emergency fund size is determined by your minimum expenses, the stability of your income and how diversified it is, whether you have other resources (e.g., spouse’s income, parental safety net, etc.) and whether you have obligations that limit your flexibility (e.g., young kids make it harder to tướng move to tướng a less expensive part of town).

If you have access to tướng enough credit, you could consider first paying off your credit cards and only then building an emergency fund. This is because the credit that becomes available as you pay down your debt could be used to tướng cover an emergency. However, take into trương mục that the credit thẻ issuer(s) could decide to tướng lower your credit limit if your income takes a big hit, leaving you with no emergency fund and no access to tướng credit.

As another caveat, if your employer offers a 50% or better yet 100% match for your contributions to tướng their retirement plan, consider funding that too up to tướng the maximum match at this tier, even at the cost of taking longer to tướng pay off credit cards. However, (a) this doesn’t apply to tướng payday loans – those carry such insane interest rates that they must be eradicated first, and (b) try finding a 0% or low-interest offer from a new credit thẻ or a consolidation loan ví you reduce your cost of carrying that credit thẻ debt.

Long-Term-Future Needs

Once you’ve handled your present and near-term needs, start allocating money to tướng longer-term financial goals. Start with your retirement fund if you haven’t maxed out in the previous tier any match offered by your employer.

Once you’ve maximized any employer match, consider investing through a Health Savings Account (HSA) if your health plan is a high-deductible, HSA-compatible plan. HSA contributions are deductible, any returns from investments in such plans aren’t taxed until you withdraw them, and if you use withdrawals for health-related expenses (even if in retirement), those withdrawals are completely tax-free.

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Next consider a Roth IRA, unless your tax rate is high and your income low enough to tướng qualify for a deductible traditional IRS, in which case get the deduction and try using the tax savings for taxable investments that provide you more flexibility than vãn retirement accounts. If you tự this, try keeping tax-efficient investments in this trương mục.

Once you’ve maxed out all the above, go back to tướng your employer retirement plan and max out your non-matched contributions there.

Saving for kids’ college funds is important, but less ví than vãn saving for retirement. As they say, you can borrow for college, but borrowing for retirement is very hard (the only way to tướng tự that is a reverse mortgage, and that’s only available if you own your home).

You may be wondering why paying off your mortgage isn’t listed in any of these tiers. The answer is that it is, under shelter in the first tier. However, paying it off early isn’t, because that’s financially foolish and leaves you at greater risk of losing your trang chủ if you lose your income before that early payoff date, which is likely still over 15 years away.

How about tự động loans? These should be included in the second tier if they charge high interest (my first tự động loan came in at a whopping 10.4%!). However, if they’re low-interest (my most recent couple of tự động loans were at 0% APR!), paying the regular payments is included in the first tier in enabling you to tướng get to tướng work. Paying it off early isn’t necessary, because a 5-year loan at say 3% would only cost you $78 per $1000 of original loan balance over the life of the loan.

Current Wants

Finally, you need to tướng budget some money for your current wants. You don’t want to tướng work hard for a lifetime to tướng fund your retirement, never spending money on enjoying the present, only to tướng die just before you retire. It’s also really hard to tướng sacrifice decades of enjoyable experiences and not give up.

Thus, make sure your budget includes spending money for things you don’t need, but that you enjoy and value. These could include giving gifts to tướng family and friends, vacations and other experiences, etc.

Another want is charity. If you tithe to tướng your church or pay membership dues to tướng your synagogue or another religious congregation, you may see this as a need. However, consider that making sure you provide for your family’s needs and avoiding a situation where you become a burden on them may need to tướng take priority.

What to tướng Do If You Run Out of Money Before You Cover All Four Tiers

If you find yourself in this unpleasant situation (this describes the first 16 years after I moved to tướng the U.S.), you have two main options. Use either or preferably both.

Reduce Your Costs

Review your budget for the first tier and see if you can reduce costs by e.g. moving to tướng a less expensive neighborhood, choosing a less-expensive xế hộp (research Edmunds.com to tướng see the full cost of ownership and compare different options – sometimes owning a new xế hộp and driving it for over 10 years costs less in the long lập cập than vãn buying a used xế hộp and having to tướng replace it earlier) or no xế hộp if you have good public transportation solutions, etc. See if you can find cheaper alternatives to tướng cover other needs such as food (we ate lunch at a local hospital cafeteria for years because it was cheaper and healthier than vãn even fast-food joints).

Increase Your Income

Try to tướng find ways to tướng make more money. This could be a side hustle, a promotion, moving to tướng a different employer, taking in a renter for a spare room if you own your trang chủ, or subletting a room if you’re renting and your landlord agrees, etc.

The Bottom Line

There’s an almost infinite variety of things you can spend money on.

There’s a smaller, but still substantial list of things you can save for (or programs through which you can save and invest).

The above Maslow-like hierarchy of financial priorities can help you prioritize where your money goes first, second, third, etc.

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

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About the Author

Opher Ganel

My career has had many unpredictable twists and turns. A MSc in theoretical physics, PhD in experimental high-energy physics, postdoc in particle detector R&D, research position in experimental cosmic-ray physics (including a couple of visits to tướng Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting NASA projects and programs. Along the way, I started other micro businesses and helped my wife start and grow her own Marriage and Family Therapy practice. Now, I use all these experiences to tướng also offer financial strategy services to tướng help independent professionals achieve their personal and business finance goals.

Connect with bu on my own site: OpherGanel.com and/or follow my Medium publication: medium.com/financial-strategy/.

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