Multitasking with Money: Is It a Good Idea?
Between managing your overflowing inbox, handling budget reports, and attending all of the meetings on your calendar, multitasking may be your default mode of operation. While you may feel like you’re operating at peak efficiency as you toggle between countless windows, in reality, constantly changing your focus may be wreaking havoc on your productivity.
The same logic can be applied to your finances. Trying to juggle multiple priorities when it comes to money can feel overwhelming. If you’re taking a flexible approach with your finances, you may not have a plan for your income. And that can leave you wondering how to allocate your money after paying your bills.
Should you save or invest? Or are you going to spend some of your money on a trip or purchase? The ability to multitask can be an asset, but it can also allow distractions to prevail. But is multitasking actually bad?
The Negative Effects of Multitasking
We often think that multitasking makes us more effective, but it turns out, in most cases, we’re wrong. For years, studies have warned us about the effects of multitasking, saying it makes people less efficient. Some research suggests that multitasking can reduce productivity by up to 40% .
Humans are wired to complete one task at a time, and studies have shown that only 2.5% of people can multitask effectively . Trying to complete more than one task at a time can compromise our ability to complete the tasks at hand. It can be even more disastrous to attempt to multitask during potentially dangerous tasks—a scarily common example of this is texting and driving.
Neuroscientists studying the brain and how it functions are concerned that the constant desire to multitask and divide our focus could be impacting our ability to perform even simple tasks. When it comes to making complex financial decisions, like how to save and invest your money, being able to focus, learn, and make mindful decisions for your financial future is pretty important.
Since there are a variety of options to weigh when it comes to your finances, it can seem appealing to multitask, but financial decisions often require attention to detail and focus. Trying to figure out how to both save and invest your extra cash on the fly without a plan may make you feel overwhelmed and stressed out.
Multitasking and Your Budget
When it comes to your budget, you might want to adjust it during the month as new expenses come in. But staying on top of your evolving budget can be difficult.
Even if you have a financial app that helps you track your spending, you might, for example, forget that you needed to put aside some extra cash for your vacation next month. Or it could slip your mind that you were using this month to focus on making additional payments to your student loans.
Just like focusing on too many tasks at one time can be detrimental to efficiency, trying to divide your budget into too many categories can be detrimental to your financial goals. One solution is to focus on what matters most, which usually boils down to spending within your means and allocating enough for your goals.
Rather than setting up dozens of spending categories, you could focus on a handful so budgeting doesn’t become overly complicated and time-consuming. Leveraging technology, such as SoFi Relay, can help you see the big picture and focus on what’s important.
If you prefer your budget to have some flexibility, it may make more sense for you to set a new budget every month. And beyond that, you could have a certain amount set aside for emergencies or variable expenses. That way, you may not feel as overwhelmed trying to keep track of your budget categories or potentially curb spending in some areas.
Multitasking and Your Investments
One option to limit multitasking when it comes to your investments is to automate regular contributions to an investment account. Those contributions can then be invested into a diversified ETF or mutual fund. Utilizing ETFs or mutual funds can take some of the guesswork out of investing, which can feel intimidating. Plus, automating your contributions might make you more likely to consistently invest.
Multitasking and Your Debt
What about multitasking when it comes to paying down debt? If you’re saddled with student loans, credit card debt, and a car loan, you can feel pulled in multiple directions.
If you’d like to multitask a little less when paying off your debt balances, you can focus your energy on knocking out one of the debts via extra payments while only paying the minimum monthly payments on the others. So for example, you could target your credit card with the lowest balance and throw any extra money you have toward that. This is called the snowball method of paying down debt.
Multitasking and Your Savings
Are you saving up for a big purchase like a car or a house? If so, consistently putting money aside is a critical component to making your financial dreams come true. But if you’re multitasking with your savings goals, you might not be making significant headway on the goal that’s most important to you.
Instead, focusing on one or two savings goals may be prudent, so that you can hone in. Prioritizing your savings goals can potentially even increase your motivation to accomplish your goals.
Once you’ve selected one or two goals to focus on, it can be helpful to track your progress. Around the 15th of each month, it might help to check in on how you’re doing. Are you on track so far? If not, how can you adjust your spending this month to help you reach your goal?
You can use your budget as a tool to keep yourself accountable. It can help you see exactly where your money is going and whether or not, say, your house fund is on track. If it’s not, a twice monthly goal check-in is an opportunity for you to refocus your financial energy.
Creating a Plan
When it comes to your financial life, staying on track is important. But if you’re trying to do everything on the fly, it could make staying on track more difficult.
Overestimating your ability to multitask can be a tough thought process to break. But you can help reduce the negative effects of multitasking by coming up with a financial plan—beyond a monthly budget.
Having a financial plan that details your strategy for saving, investing, and budgeting can help you stay committed to your financial goals and simplify your life. If you’re already a SoFi member, a meeting with a SoFi financial advisor can help you create a plan and clarify your financial goals.
With SoFi Invest, members have access to a team of credentialed financial professionals (this is all complimentary for SoFi members) who can assist you in establishing your financial goals and developing a plan to help you reach them.
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