281 | How to Prioritize Your Finances

Many lawyers find themselves with no money left at the end of the month for their goals.

It’s all too common, but it doesn’t have to be that way.

In this episode, let’s talk about the best way to prioritize your finances so you can achieve your goals.

• • the popular “rocks, pebbles, and sand” exercise
  • the rocks in your finances and how to prioritize them
  • the pebbles and sand in your finances and how to prioritize them
  • how people typically order their rocks, pebbles, and sand and why this leads to problems
  • why the order of your rocks, pebbles, and sand matters

You’re listening to Personal Finance for Lawyers. I’m Rho Thomas, and as a busy wife, mom, and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey, friend. Welcome back to the show.

Today we are talking about how to prioritize your spending. My brother sent me a video recently of that exercise where you’ve got a jar and you’re trying to fit rocks and pebbles and sand into it. And I had seen that exercise before, but this was my first time seeing it while I was in the midst of this work, like while I was so focused on personal finance, and so naturally, I started thinking about its application to personal finance.

If you’re not familiar with the exercise, you’ve got this jar, and it’s supposed to represent your time or your life. And then you’ve got big rocks; you’ve got pebbles; and you’ve got sand. And you’ve got to put the stuff into the jar in the right order for it all to fit.

You put in the big rocks first, which represent your highest priorities, those things that are most important to you in your life. Then you fill in the pebbles, those smaller rocks, and they fill into the cracks. Those are other things that are important, but maybe aren’t your highest priorities or the things that are most important to you. Then you fill in with the sand, and the sand is other things that aren’t as important. They’re distractions. They are things that you do, but they aren’t the biggest things for you or the most important things for you. If you try to put the rocks, pebbles, and sand in any other order, it won’t all fit.

The point of the exercise is to show you that you want to make space in your life for those things that are your highest priorities, those things that are the most important to you—your goals, your relationships, your health, things like that. Make space for those first.

Then you make space for other things that are important but aren’t the biggest importance to you. So you know, you’ve got your bills, you’ve got taking care of other things around your house, stuff like that.

And then you’ve got time for other things that aren’t important. The distractions, the things that you’re just doing with your time.

When you make space for those biggest, highest priority things first, you make sure that they actually get accomplished. If you don’t make space for them first, and you allow your jar to be filled with the kind of medium things that are important but not your highest importance, and the distractions, you don’t have space for the things that are most important to you.

The same is true with your personal finances. So if we think about this jar as representing how much money you get in a month, for example, we want to make space for the biggest things, the highest priority things for you first.

I think the rocks within personal finance would be the goals that you have. Maybe you want to buy a house. Maybe you are saving for some other big expense. You’re trying to pay off your credit cards. You’re building up an emergency fund like those big goals that you have. Those are your big rocks.

Your pebbles are going to be things like your monthly bills, right? We’ve got to make sure that you’re still paying for your housing. You’re still paying for your car. You’re paying for groceries. Things like that are important, but maybe they’re not your ultimate goal. They still need to get done, but they are not the highest priority for you.

And then your sand is going to be those things that you just want. Going out to eat, or buying stuff on Amazon or buying stuff on Tiktok shop or Instagram or whatever it is. Those things that aren’t necessarily important to you. They’re not the highest priority for you, but they’re things that you also are doing with your money.

You want to make sure that you make room for the big goals first. So when you’re creating a spending plan for how you’re going to use your money in the month, let’s figure out how much money you’re going to put towards buying your house, how much money you’re going to put towards paying off your credit cards, how much money you’re going to put towards saving for the emergency fund. Whatever that goal is that you’re working on, how much money are you going to allocate toward that goal? Let’s do that first.

Then we’re looking at the bills that you have, the minimum payments on your debts, how much you need to spend on groceries, how much need to spend on household items, stuff like that. That stuff is important, right? These are your pebbles. It’s important. We want to make sure that they’re taken care of. But if we don’t make room for the big rocks first, you’re not going to have room for them. So we’re going to fill in the pebbles.

And then with the rest of the money left over, after you’ve got your goals in there, after you’ve got the necessities, the bills, the groceries, that kind of stuff in, now we’re going to figure out how much you have for spending on the things that aren’t as important, but maybe you still want to do. That’s your sand. The sand is filling in the cracks of what’s left.

What I see often happen is people are putting in their pebbles because they want to make sure that they are paying for their housing, they’re paying for their car, they’re paying for food, etc. And then they’re putting in sand, and that’s filling up the whole rest of the jar. And there’s no room for the big rocks.

So they are going on with credit card debt that they want to get rid of, but they’re not making space for. They don’t have room to save for that house, right? Saving for the down payment. They’re not putting money away in an emergency fund. Those big goals that they have are really just dreams, because they’re not making space for them. And if you don’t make space for them intentionally, on the front end, that space is not going to magically be created. You will always find a way to spend all the money if you don’t set aside money for your goals first.

So that exercise, I thought, was just a really good illustration of how you want to think about your needs, your wants, and your goals, because it’s very easy to fill your entire jar, your entire income, with needs and wants and never make space for your goals.

So you’re going to flip it. You’re going to make space for your goals and then fill in the needs and the wants, and that way you make sure that you actually make progress towards those goals instead of wishing that you had an emergency fund, wishing that you could buy a house, wishing that you could pay off your debt month after month, but never actually making progress on it.

Alright so that is how to think about prioritizing your money, how you’re using your money each month. I hope that is helpful for you. And if you would like more direct help with how to do this with your specific finances, schedule a consultation at rhothomas.com/call, and let’s talk about how we can work together.

Alright, that is it for this week’s episode. Thank you for being here. Please take a second and subscribe to the show and leave a review if you haven’t done so already. Both of those things help the show get seen by more people. You know when you see something, you’re looking at the reviews. If there aren’t a lot of reviews, you’re probably gonna move on. So you leaving a review helps when someone is coming across this show and deciding whether or not they want to listen. And as always, I appreciate your support.

As we close out, friend, I pray that you take the information you learn here, apply it in your life, and open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to take back control of your time, build wealth, and live a life of freedom and choice you deserve. Talk to you later.