This post will cover the important techniques to follow through and stay on track to achieve your financial goals.
Perhaps this sounds familiar:
You come up with a money saving goal, maybe a large purchase you need to make in the next few months or a family vacation next summer, and you start out super motivated and enviously thrifty. Within the first month of saving extra money, you stash away and extra few hundred dollars. Yes!
The next month rolls around and that Starbucks is looking a little more tempting. Then you go to Target and who knows why the bill was over $150 when all you needed was some laundry detergent? Somehow your thrifty spell is wearing off.
Let’s face it, saving money quickly becomes tedious when the reward is months or years into the future. Why save aggressively and feel deprived now when your end goal is so far away?
If you are paying off debt, saving money for a specific goal or planning for an early retirement, how do you maintain your frugal habits when progress feels slow or nonexistent?
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How do you stay on track?
Not surprisingly, a lack of motivation to continue saving money for your financial goals is a real problem and often prevents progress and success.
But it doesn’t have to be that hard. You can reclaim motivation.
Here’s how to stay on track and to achieve your financial goals:
Revisit your why
Now is a good time to sit back and revisit why are you saving money.
Do you have debt to payoff? Do you have a specific financial goal?
Next, take this a step further. Why do you have this goal? What will it mean to you when you accomplish it? How will your life be different?
Your why needs to be very personal, powerful and meaningful to you.
As an example, my financial goal is financial independence, or FI as it’s most often referred to in the financial independence community.
This goal is super important to me. It’s what this blog is all about. So when I feel like overspending or giving up on my budget or just being lazy, I revisit why I am working so hard.
Often, I imagine what my life will be like once I do reach FI. I imagine the freedom I will have. Freedom from my paycheck, freedom to spend time with my family and the freedom to travel. This is an amazingly effective way to become re-energized to dig into my financials and see what more I can do to not just stay the course, but to accelerate my journey to FI.
Keep in mind, I do this when I’m feeling unmotivated and experiencing shiny object syndrome (or pretty dress syndrome, or nice-meal-out-rather-than-cooking syndrome). In fact, just 10 minutes ago I could tell you all about how much I needed a new tablet. I could have listed of 10 reasons why I really needed one. I really need it in order to write this post. My laptop is just too clunky and cumbersome when I travel. I’ll get more work done on a sleek new device. The excuses were many and quite detailed.
When this happens, I go back to my why. I imagine my life when I have successfully reached my financial goals. And then forget all about purchasing anything that isn’t absolutely essential. Because that $500 I wanted to spend on a new tablet is so much better off working away earning interest and speeding up my journey to FI.
So next time you feel like veering off path, revisit your goal and why you made that goal. Your why needs to be super powerful and meaningful for you. Keep it near and dear and revisit it often.
Be clear about your goal and exactly how you will get there
It’s one thing to have a goal. For instance, you may tell yourself that you will pay off all your debt this year. And that’s a great goal to have. However, unless you are specific about what the goal is and how you plan on achieving it, you won’t have enough reason to stay on track.
Instead, clearly define your goal. How much debt do you have to pay off? $5,000? $75,000?
Once you define your goal, map out how you plan on working towards your goal, how long it will take you, and give yourself some milestones along the way.
Tip: When you break your goal into small, achievable steps, you get to enjoy the feeling of making progress and feel motivated along the way.
Let’s say you want to pay off your debt. Here’s how you can go about defining your goal and setting yourself up to make it happen.
Questions to ask:
- How much do you need to payoff?
- How long will it take to do this?
- What milestones would be helpful to keep you motivated?
- I have $25,000 of consumer debt and student loans to payoff.
- Since I am able to save $1,000 every month, it will take me just over 2 years to payoff all my debt.
- I really like spending money and feel deprived if I can’t have fun and spend money sometimes. Therefore, for every $5,000 I pay off, I will treat myself to an extra $200 to spend however I like. This will slow my progress down a little, but keep me motivated to pay off each $5,000 as quickly as possible.
Now let’s say that your goal is spending less money so that your spouse can quit their job and stay home with the kids.
Questions to ask:
- How much money does your family spend every year and how much money will you have each year on just one income?
- What do you need to save each month in order to live on one income?
- How much money do you need to have saved as an emergency fund?
- Over what period of time will it take to bring expenses down and save enough emergency fund money?
- What milestones will you set along the way to stay motivated?
- Yearly household expenses are $85,000 per year and the goal is to live off of one income of $55,000 per year.
- Since child care expenses and income taxes will be lower, overall household living expenses will be cut down to about $65,000. This leaves $10,000 that you will have to cut back on in order to bring expenses down to your goal of $55,000.
- To feel comfortable giving up one income, you decide that your emergency savings should be able to cover 6 months of expenses. That’s $27,500.
- You are currently saving $1,000 per month which can go towards your emergency savings. It will take you about 6 months to learn to be more frugal and lower your overall spending by another $833. One step you could take to accomplish this is by creating a budget and cutting back on eating out, travel, and general spending. Or, you can invest some money now and convert your garage into a studio apartment, which will rent for $550 per month, helping you reach your goals quicker. With this plan, you determine that it will take one year to bring your emergency savings up to $27,500 and bring your spending down to the point that you can live off of the one income.
- The first milestone is converting the garage into a studio and renting it out. You decide that you will have a nice dinner out to celebrate your first passive income check! Your next milestone is to celebrate your first month staying within budget, which will be a smaller celebration so as to stay on track. Your next milestone is when you reach your savings goal of $27,500. Finally, you have the ultimate reward of leaving one job and keeping the kids at home rather than in daycare.
As you can see from these two very different examples, clearly defining the goal, mapping out the steps necessary, and determining a time frame to achieve your goal are vital to making progress and maintaining momentum.
A goal without a plan is just a wish.
Track your progress
If you have a competitive nature, now’s the time to use it to your advantage.
Be sure to track where you start and all the progress that you make along the way. Every month, mark down the difference you’ve made. See if you can set small, short-term milestones and beat them. If you are working with your spouse to achieve a financial goal, see if you can save more than your partner does. Who can cut spending the most? A little friendly competition can really speed things along!
If you manage to save an extra $50 this month, see if you can beat that next month.
Remember, if you aren’t keeping track of your spending and progress, you have no idea if you saved that extra $50 last month or spent an extra $50! Tracking your progress is essential to know how far you’ve come, how much further you have to go, or whether your sacrifices have made an impact. Without this knowledge there is no reason to stay focused.
Without focus, you lose sight of your goals and either don’t make progress, or worse, fall behind. Know exactly where you are and what you need to adjust in order to stay on track.
Action Step: If you aren’t sure where to start with your long and short-term goals, download the Big Vision to Action Steps Goal Setting Workbook. Learn exactly how to break those big, scary goals down into the smaller steps that you can take action on today.
Make a vision board
This ties into your why. If you need help visualizing what you are working towards and why it is so important to you, make a vision board so you have a constant reminder of what you want to achieve.
For example, your goal might be the purchase of a new home. A vision board could display images of what types of homes you love, architecture and landscaping ideas, neighborhoods and interior design ideas.
If you want to travel, you could make a board of all the places you want to visit, the things you’ll want to take with you, cultures you want to experience and landmarks you want to see.
Or, if you want to quit your job and retire early, make a board of all the projects you want to work on as soon as you have the time available to you. Include images that represent the freedom that you will feel once you achieve FI.
Reward yourself for achieving milestones
As I already provided in the examples, it can be super helpful to have a reward to look forward to as you make progress. Long term goals can be so hard to achieve if there is nothing to look forward to for years down the road. Instead, break each goal down into smaller steps and factor in a little extra spending for when you reach your milestones.
No one wants to be super frugal for very long. No one enjoys feeling deprived. Therefore, if you have something to look forward to, you have a much higher chance of staying on track and reaching your goals even quicker than you expect.
Tell your friends and family and hold yourself accountable
I also don’t think that anyone enjoys feeling like a failure. So if you really want to reach a certain gaol, tell everyone you know what you plan to do and how you will do it.
You may very well find that your motivation is contagious. As you make progress, your friends and family will want to jump on that bandwagon, too. Then you can all keep each other accountable and greatly increase your motivation and the time it takes you to reach your goals.
As an extreme example, this blog is my way of holding myself accountable. I am so passionate about reaching my goal of FI that I’m willing to bare myself to the world and tell everyone that will listen exactly what I’m doing and why. This pretty much means that I don’t get to fail. I’d be failing myself and every one of my readers. How’s that for pressure to stay on track?
Help yourself prevent setbacks and stay on track to achieving your financial goals by doing the following:
- Remember why this goal is important to you. Revisit your why often.
- Clearly define your goal and the steps you will take to achieve it.
- Track your progress.
- Make a vision board, which is a visual representation of your why.
- Create milestones along your path to achieving your goal. Smaller steps keep you aware of the progress you are making.
- Hold yourself accountable by telling people about your financial goal. They just might be motivated to work on their own goals as well.
Think about which area you have the most trouble with.
When you need a little forward momentum, first review the list of steps you can take to stay on track. Think about which areas you have the hardest time with and would really help you reclaim your motivation and progress.
Next, focus on just one of those steps. Keep at it until you start making headway again.
Finally, revisit this post whenever you fall behind again. Pick another area that you are struggling with and focus on that step until you get back on track.
Good luck and let me know if this has helped you!