Unless you're incredibly lucky (and incredibly wealthy), you likely don't have the funds to afford everything you need or want—especially at key milestone moments in your life. That's the situation this week's guest, 32-year-old Tessa from Chicago (not her real name) is faced with, as she's trying to afford a wedding, a house, and potentially kids as well within the next year.
"It's really scary for me as somebody who has always been a saver," she says. "And now it's like, OK, we want to buy a house, which is going to be pretty much all of my savings. And then we'll probably recoup a tiny bit of money from our wedding, but that's a huge chunk of change that's going out the door. So I'm nervous when I see all of my savings depleting."
So how do you decide where your money goes, when you have a lot of competing priorities? To get some guidance, Money Confidential host Stefanie O'Connell Rodriguez turned to financial expert Sahirenys Pierce, founder of Poised Finance Lifestyle.
Pierce suggests first looking at what's most important to you—not to society at large.
"Everyone is trying to do everything right when they graduate college—trying to pay off debt, trying to get married, trying to have kids, trying to buy a house, trying to buy an electric car," Pierce says. "The list goes on and on, and they're stacking right on top of each other. And I feel like a lot of times we have to step back and realize, am I just copying what society or what everyone else is doing?"
It doesn't matter what they're saying online. You're 20. You should be doing this. You're 30. You should be doing that. What do we actually want to accomplish? And if that changes along the route, OK. It changes.
—Sahirenys Pierce, founder of Poised Finance Lifestyle
Once you decide what's most important to you, you need to look at how you can achieve those goals best. Sometimes, that may involve sliding your timeline a bit—as Pierce did herself by extending her engagement to allow more time to save for her wedding.
And in other cases, it may require developing a side hustle short term to help you boost your savings. "We're not trying to do side hustles forever," Pierce says. "They're here to help us propel towards paying off debt or saving for a wedding or building up an emergency fund. And after that, we need to build a system that's more sustainable."
Pierce recommends what she calls a "high five" spending plan, which involves creating five accounts to solidify her goals. That includes two checking accounts—one for bills, one for "lifestyle spending"—and three savings accounts for emergency funds, short-term goals (less than a year away) and long-term goals (one year to five years away). That allows you to compartmentalize your money—and avoid the temptation to spend money that's set aside for a certain goal.
But even as you're prioritizing your money, there's room for flexibility. "Sometimes you need to pause on a goal, but you want to make sure that you're still funding it and reminding yourself, this is something I want to work towards," Pierce says. "This is why I'm sacrificing over here so I can continue achieving this goal over here."
Check out this week's Money Confidential episode—"How do I save for a wedding, a house, and a family—all at the same time?"—to get more insights into how to juggle competing spending priorities so you can achieve your goals. Money Confidential is available on Apple podcasts, Amazon, Spotify, Player FM, Stitcher, and wherever you listen to your podcasts.
Read the full transcript of this week's episode.