A Doctor Tells: How to Save More of Your Money

Gregory A. Hood, MD


November 30, 2017

In This Article

Reaching the Place You Want to Be

Step 4: Visualize and Prioritize Your Goals

Visualizing a budgetary goal implicitly involves a relative decision on how frugal one wishes to be. Do you want to save aggressively enough to be debt-free? If so, by what age? How much do you want to set aside for emergencies? What's a reasonable amount to allocate for your family's daily cash flow? These are all questions you need to consider before you can begin traveling the path to financial independence.

Another option to consider is whether your family can live on one salary, even if both spouses are working. Being able to operate as a one-income household is a fast-track to financial independence.

Once you've drawn up your list of goals, it's essential to prioritize them. For example, maybe your goal is to be debt-free and have 6 months of savings in the bank. When all is going well, these goals may coexist harmoniously. However, if your employment contract isn't renewed, then the potential of a dramatic reduction in your take-home pay may drain your savings and derail those goals, at least temporarily. In such events, a comprehensive reassessment may become necessary.

When a family's finances don't adhere to rules and wind up out of control, there are several negative consequences. That these negatives quietly fade away once a priority is placed on frugality is a realization that typically dawns on people slowly, over time. In fact, frugalness may lead you to be better prepared in the long run to take on the gift-giving, experiential events, or vacations with family and friends that you experienced in your more free-spending days.

This prioritization can also have other interesting effects. By freeing your estimation of self-worth from comparisons with "the Joneses," and by knowing that you're succeeding by meeting your goals, the feelings of freedom and peace that you may attain may be among your greatest rewards.

For prioritization to be effective in living a frugal life, however, you need to look at the bottom line, which means accumulating assets while reducing debts. True assets, such as equities and real estate, generally appreciate in material value, whereas pseudo-assets—such as cars and boats, to name a few—almost invariably depreciate in value.


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