Here's Why Multitasking and Money Don't Mix

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Think you're good at multitasking? You're not.

Plenty of research has shown that multitasking simply doesn't work. Our brains can't focus on more than one thing at a time. We might tell ourselves that this isn't true, that we can concentrate on several tasks at once. The truth, though, is that we're fooling ourselves.

Multitasking is especially dangerous when it comes to managing our money. You might think that you can juggle several financial tasks at once, everything from building an emergency fund to paying off your credit card debt to saving for the down payment on your first home.

But just as your brain can't juggle multiple tasks at once, neither can most people's finances.

Here are three reasons why you should never multitask when it comes to managing your money.

It Doesn't Work

In 2014, Psychology Today ran a fascinating feature story about multitasking. The story pointed out that the human brain can't take on simultaneous tasks. We might think we can hold a conversation on our smartphones, surf the Web on our laptop, and text another friend on our tablet at the same time. But we can't, at least not effectively.

According to the Psychology Today story, when we multitask, our brain just switches from task to task more quickly, employing a sort of stop/start process. This makes us sloppy, meaning that we make more mistakes. It can also sap our mental energy over time.

So what happens when we try to multitask with our finances? We try to pay off debt at the same time we try to build an emergency fund? We get sloppy and we make mistakes. We forget to pay our credit card bill and incur a late fee, or we go months without making a payment into our emergency fund.

The better approach? Ditch the multitasking and take on one financial job at a time.

We Don't Get Anything Done

You might think multitasking means you are being more efficient. Actually, it's the opposite. When we take on several tasks at once — say writing a report at work, answering email messages from colleagues, and trying to schedule dentist appointments for our kids — we tend to get none of these jobs done in a timely manner.

The better approach is to again move away from multitasking and attack these jobs one at a time until we finish each of them.

When it comes to managing finances, completing one task at a time again pays dividends. Most financial experts recommend that you pay off high interest rate credit card debt first by sending extra money at these bills until you eliminate them. It's hard to do this if you're diverting some funds to building an emergency fund at the same time. 

Money experts recommend creating a plan that starts with eliminating credit card debt, then moves on to building an emergency fund with at least six months' worth of living expenses in it. Once you complete these two tasks, you can then start saving for retirement or for a down payment on a new home.

We Get Depressed

Multitasking is exhausting. If you're constantly juggling three or four tasks at once, it's difficult to focus on any one thing. It's also difficult to take a breather to enjoy life. The constant stress that goes along with multitasking can make you depressed.

The same holds true when we multitask money matters. If you are constantly alternating between paying down your credit card debt, saving for retirement, and investing in the stock market, you'll feel like you're not doing a good job at any of these tasks. As your credit card debt continues to grow and your retirement savings don't, it'll be easy to fall into a funk.

But if you take on one of these financial tasks at a time? You'll feel a sense of accomplishment when you are able to check off your goals one by one.

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