One of the many keys to effectively changing your life is prioritization. Everyone has limited resources, whether those resources are time, money, or energy. Since you’re likely limited by your time and energy, it only makes sense to focus your resources on creating those financial habits that will impact your situation the most.

Try this process to focus on your most important new habit:

1. Where are you feeling the most pain in your financial life? What keeps you up late at night? Is it the lack of savings? A non-existent emergency fund? Too little income to pay your bills each month? A bleak retirement future?
   • Addressing the most stressful financial challenge in your life can be an effective place to start.

2. Which new habit would have the most significant impact on your finances? Knowing that you need to work on your savings doesn’t necessarily highlight the optimal habit to adopt. Consider the impact each potential new habit would bring to your life.
   • Make a list of all the potential habits you could build related to your target financial concern.
   • Prioritize your list based on the likely outcome of incorporating that habit into your life. Eliminate the bottom 80%.
   • Reexamine the 20% that remains. Visualize the impact each of the remaining possibilities will have one month, six months, 12 months, and five years. How will the habit impact your life 25 years from now?
   • Choose the habit that makes the most sense after carefully considering the future. If you’re torn between 2 or more habits, consider which would be the easiest to implement. Never underestimate the power of momentum. You can swing back around and pick up the other habits shortly.

3. Seek to be average at first. Bring all the parts of your finances up to an average level before attempting to be a high achiever. The worst aspects of your financial life are causing your most significant financial discomfort.
   • In other words, eliminate consumer debt, have an emergency fund, save at least 10% of your income, have adequate insurance, and be consistently saving for retirement before worrying about purchasing a vacation home or installing a swimming pool.
   • If your habit doesn’t address a fundamental personal finance issue, be sure your target habit is in your best interest.
   • On a 1 to 10 scale, bring each part of your finances up to a “5” before attempting anything on a grander scale.
     
     
4. Do you have what you need to put the habit into place? If not, can you get what you need or start small enough that the habit is viable? If you’re 75 lbs overweight and spend every evening on the couch, you’d have to start small if your desired habit was to run 10 miles daily. You’d need running shoes, too.
   • Some financial habits might require you to gain significant knowledge or have a starting point beyond your reach.
   • Determine if the habit is possible with your available resources and expertise. Another goal might be more appropriate.
     
     

Time is a limiting factor for everyone, and there are only so many hours that can be applied to building and performing a new financial habit. Ensure you’re spending your time wisely and effectively. The most important habits are often the least appealing. Focus on positive habits to best enhance your finances.

I recommend Dave Ramsey’s set of books and programs if you struggle with how and where to start. While, as a CPA, I can argue that there are theoretically better ways to build wealth, I have yet to see a more practical or effective approach. Start with The Total Money Makeover and expand your growth from there. You will develop the habits you need to build a stable, long-term financial future.