Have you ever spied an awesome opportunity, gotten excited for a split second, and then kicked yourself because yesterday's choices are standing in the way of jumping on it? You're not alone. I'm in the midst of saving for a down payment on my first house, and man do I wish I'd gotten serious about it five years ago... but there's hope for us both. We can start here and still get there. Let's talk about how.
Disclaimer: This is not a holistic budget strategy or a "few easy steps to completely change your financial world." That said, if you're looking to gain some momentum financially, these tools may help along the journey.
Good news - when it comes to goal setting, you make the rules. Your priorities are the ones that matter. You've probably heard of financial strategies like getting the most bang for your buck by paying off high interest loans first, or accelerating your momentum with the snowball approach - paying off the smallest balances first. They're both good options, but if they're not meaningful to you, latch on to goals that are.
A great question to ask yourself as you prioritize is: What stresses me out the most about my current finances? Wouldn't it be great to eliminate that pain point? So start there. If reaching your goals can set you up for financial success and give you peace of mind, you'll be driven to reach your goals.
Maybe it's the way Christmas spending seems to always lead to credit card debt, or a sub-savings labeled "emergency fund" that's nearly empty. Or maybe every time you turn on HGTV it's a painful reminder that your kitchen appliances are barely hanging on. Once you determine a driving purpose, it's easier to make a plan - I'll put $X.XX each month toward my bills from last Christmas, and budget $X.XX each month for this coming December - so I don't have to bust out the plastic. Just plotting out your plan of action feels freeing, and think of how great it'll be once you're "there!"
I'm a fan of positive (or at least balanced) reinforcement. So when I think of reminders, I think of encouraging notes to myself, like a Post-it on my fridge that says I've already saved $150 toward this year's vacation - road trip! I want to see what I'm doing well and keep focused on the long-term payoff.
If it's a larger goal you're working on, like saving a down payment for a house or paying down a high balance loan, think of ways to visually keep tabs. Maybe it's a vase you fill with decorative stones as you save or make extra payments, each piece representing a step in the right direction.
But what about those pesky derailers: mistakes? It's important to know how to position yourself to bounce back. Maybe putting up a reminder of the blunder will help. But I'd recommend only doing it if you're confident it'll be motivating. Because if reminding yourself where you fell short makes you feel bad, you'll start to associate that bad feeling with the whole business of making the changes you're focusing on and before you know it, you'll be standing in the dust of the proverbial wagon.
So keep it positive, people. Which brings us to my favorite part of skill-building and change-making: rewards!
Sometimes, if the goal is short term, making it happen is plenty of reward. For example, cutting back on eating out this month so I can buy new jeans next month (even if they aren't on sale, gasp!).
On the other hand, paying off debt can take a lot of time and discipline. I set a goal in my early 20s to pay off my student loans in five years instead of 10. And five years equates to 60 months of temptation to make the minimum payment and spend the extra on fun! But I kept on. And every month I stuck to my goal, I found a way to figuratively pat myself on the back.
The challenging part of rewarding myself for financial success, especially in the beginning, was my habit of equating celebration with spending. And it's entirely counterproductive to celebrate putting your money to its best use by going on an (over)spending spree. But it only took one brainstorm session to list a number of reward ideas that didn't fly in the face of my long-term goals - some of my favorites are guilt-free Netflix marathons, at-home spa days, and picnicking and Frisbee at a local park.
There's a good chance the way you and I reward ourselves will be a bit different. And that's good. Your strategy should be tailored to fit you. The bottom line is that sustained, long-term change can be a real challenge. Besting that challenge starts with ideas and enthusiasm. But it can't end there. I hope that some iteration of these tools can help gain traction on the financial goals that mean the most to you.