Q. How do I set financial priorities?

A. That's a question I hear from many people, and of course there's no simple answer since your priorities depend on your stage of life, your goals and your current financial system. But don't give up because I can give you a framework for thinking about those priorities -- so you can make sensible decisions for your personal situation.

First, you need to make a list of the financial priorities that apply. These are not only spending priorities, but saving, investing, insuring and "understanding" tasks. Check the ones on this list that apply to you:

-- Budget: Figuring out where you stand on a daily and monthly cash flow basis.

-- Debt: Creating a plan to pay down debt.

-- Savings goals: How much will you need?

-- Retirement: Deciding where and how you'll save or, in retirement, how much you can safely withdraw.

-- College: Money set aside for children or grandchildren.

-- Life insurance: Do you really need it and, if so, how much?

-- Investments: Getting advice for money inside and outside your retirement plan.

-- Estate plan: What happens if you don't have a will or living trust?

Don't be overwhelmed by the number of tasks or the difficulty in figuring out which to attack first!

How to establish priorities

There is a simple question to ask yourself (or to discuss with your spouse or partner, if you're planning together). Continued...