How to Get Organized and Prioritize When You Have Competing Financial Goals

Meet Lisa, a successful 51-year-old marketing executive and mother of two teenagers. From the outside, it looks like she’s managing it all well - her career, her family, and her finances. But behind the scenes, Lisa is feeling the pressure of competing financial priorities.

Her mother passed away a few months ago, leaving Lisa and her sister in charge of settling the estate. She’s inherited some money but doesn’t know the best way to use it. Will she have to pay taxes? How much, and when? Is it possible to reduce them?

At the same time, her oldest child is a high school junior, and college is looming. She’s put aside money towards their education, but Lisa wonders whether it’s too soon - or too late - to have meaningful conversations with her kids about deciding which school to select. Despite being a college graduate herself, she knows tuition costs have skyrocketed, and she’s worried about being saddled with parent loan debt, or having her kids burdened with student loans after they graduate.

And then there’s retirement. Lisa has saved diligently over the years. She has a nice benefits package at work, including a retirement plan with a great company match - but isn’t sure if she’s truly on track or if her recent financial decisions could put her plans at risk. Meanwhile, her days are packed with work meetings, soccer practices, and moments of grief for her mom, leaving little time to tackle these questions. Queue even more overwhelm.

Lisa’s story isn’t uncommon. Many of us face moments when life’s financial demands seem to hit all at once. The key to overcoming this feeling of overwhelm is to not put off getting organized, clarifying your priorities, and creating a plan of action.

Step 1: Take Inventory of Your Financial Situation

Lisa’s first step is to get a clear picture of where she stands financially. This involves:

• Listing all her current assets, including her anticipated inheritance, retirement savings, and any existing college funds for her kids.

• Reviewing her debts, such as her mortgage, vehicle loans, or outstanding credit card balances.

• Outlining her monthly income and expenses to understand her cash flow and lifestyle expenses.

This exercise helps Lisa see her financial picture more clearly and lays the groundwork for informed decision-making.

Step 2: Clarify and Rank Your Goals

With competing goals like paying for college, settling her mom’s estate, and ensuring retirement readiness, Lisa needs to prioritize. Here’s how she ranks her goals:

1. Retirement: Lisa knows her long-term financial security hinges on staying on track for retirement. She doesn’t want to sacrifice her future for short-term needs.

2. College Planning: While Lisa loves her kids wants to help them with college costs, she also knows there are tools like financial aid and scholarships that can bridge the gap. Moreover, she can’t borrow for retirement, but she can borrow for college if necessary.

3. Estate Settlement: Managing her mom’s estate is a necessary but finite task that she needs to navigate carefully, especially when it comes to her inheritance. She has the help of her sister and a qualified attorney to navigate the process.

By clarifying her priorities, Lisa can focus on what matters most without feeling pulled in too many directions.

Step 3: Create a Financial Plan

To address her competing goals, Lisa works with a team of financial advisors to create a plan that tackles each area.

1. Retirement Readiness:
   Lisa’s advisor reviews her retirement accounts and uses planning tools to project her savings trajectory. They adjust her contributions to maximize her employer’s 401(k) match and suggest investing part of her inheritance to further boost her retirement fund.

2. College Conversations:
   The advisor helps Lisa approach the topic with her teenagers. Together, they create a game plan that includes:

   • Researching the cost of schools her kids are interested in.

   • Using an online calculator to estimate her Expected Family Contribution (EFC).

   • Setting realistic expectations with her kids about what the family can afford, focusing on their contributions, scholarships, or student loans if necessary.

3. Inheritance Management:
   Lisa decides to allocate her inheritance strategically:

   • A portion goes to paying off a high-interest credit cards.

   • Another portion is used to complete a backdoor Roth contribution, since she earns too much to make a direct contribution; increasing her tax-diversification in retirement.

   • An additional portion is invested in a tax-sensitive investment portfolio, structured to minimize her end-of-year tax liability from interest, dividends and capital gains.

   • The remainder is saved in a high-yield account for future opportunities, such as helping her kids with college or unexpected expenses.

4. Settling the Estate:
   The advisor connects Lisa with an attorney to ensure the estate is handled efficiently and equitably. They also review any tax implications from her inheritance to avoid surprises later.

Step 4: Automate and Delegate

Like many working parents, Lisa is busy. To make her financial plan manageable, she automates where possible:

• Savings Contributions: Automatic transfers to her retirement and savings accounts keep her goals on track.

• College Fund: She sets up a 529 plan for each child, starting with the money she put into a high-yield savings, and contributing monthly to build their balances gradually.

• Reviewing Company Retirement Benefits: Lisa asks her advisor to review her retirement benefits to double check if she’s taking full advantage of all opportunities available to her, and whether she invested appropriately to meet her goals. Her advisor provides a comprehensive review of her benefits package for additional peace of mind.

Step 5: Schedule Check-Ins

Financial priorities shift as life evolves, so it’s essential to revisit the plan regularly. Lisa schedules quarterly check-ins with her financial advisor to ensure she stays on track and to make adjustments as needed.

Conclusion

Lisa’s story shows that even with competing financial goals, you don’t have to feel overwhelmed. By organizing your finances, clarifying your priorities, and creating a plan, you can take control of your financial future.

If you’re facing a similar situation, now is the perfect time to take that first step. Reach out to schedule a conversation and start building a plan that works for you.

The information provided in this blog is for educational purposes only and should not be considered financial, legal, or tax advice. Please consult with a qualified financial advisor, tax professional, or attorney regarding your specific circumstances. Investments involve risk and are not guaranteed. Past performance is not indicative of future results.