I think about these questions a lot and can offer some suggestions—not because I’m an expert on hitting goals but because I’ve had a lot of experience attempting to achieve financial goals. Sometimes I’ve succeeded and many other times I’ve failed and had to try again, but I’ve learned a lot from those experiences. I’ve also studied how to develop successful habits (Zenhabits.net is my favorite support site).
When you think about it, the key to achieving any goal is developing good habits to help you get where you want to go.
So how do you start? Borrow the SMART concept, which says that effective goals should be Specific, Measurable, Assignable, Realistic, and Time-Related. Let’s break that down:
1. Make it specific: Target one area of your financial life for improvement at a time. Trust me. If you try to overhaul a bunch of areas all at once, you’ll forget what you’re trying to achieve or you’ll quickly get overwhelmed. Choose just one thing, such as cutting your water bill, and focus on that goal for a month or more. Once you’ve spent some time focusing and can manage your goal automatically, you can move on to another goal.
2. Make it measurable: How will you know when you’ve started making progress? Exactly how will you track your decreasing water bill, your changing grocery bill, or any other area on which you’ve decided to focus? When we targeted our rising water bill, we measured progress by simply looking at our quarterly bill, comparing it to previous bills, and talking as a family about ways to use less water.
If you’re trying to cut an ongoing expense such as groceries, you might want to tally up your grocery spending after each weekly trip or at the end of the month. You can do this manually, use a budgeting program like Quicken or YNAB, or employ a tracking program like Mint. Challenge yourself to decrease your spending by a certain percentage, or give yourself a firm amount to spend each week and see how well you can eat within your set budget.
3. Assign it: Who is responsible for meeting this goal and what specifically is that person’s part in the project? If you’re aiming to cut your cable TV costs, for example, who in your family will research competitors’ prices? Which of you will look into how much it might cost to try something drastic, such as cutting cable and only streaming TV shows and movies online? Getting others involved can make it easier to reach your goal.
4. Be realistic: Don’t overpromise yourself. Realistically, you’re not going to cut your family’s food budget in half within a month or two or increase your retirement savings by 50 percent this year. Expecting too much is a quick way to discourage yourself and your family. So start small—very small. Aim to increase your retirement savings by 1 percent every six months, for example, or plan to open a 529 college savings account by September. If you make your goals small enough, you’ll trick yourself into actually doing them because there’s no reason not to.
5. Create a time limit. Challenge yourself to be specific about when you’ll do certain tasks that move you toward your goals. Instead of vaguely aiming to cut your cable bill at some point, mark on your calendar when exactly you’ll do your research or call the cable company to ask about a discount. Or, plan to review your eating-out spending on the last Thursday of every month. Create an electronic reminder for yourself if you need to.
To those five SMART steps, I would add three more:
6. Celebrate small victories. When our shower-loving daughters helped us cut our water bill by $50 last quarter, we gave them each a surprise $5 “water conservation” reward. That got their attention and interested them in helping us keep the water bill manageable in the future.
7. Don’t fuss over the “right” financial goal—just pick one. It’s tempting for couples to have long debates over which money goal to tackle first. Should we cut back our entertainment spending or try to save more on our utility bills? My husband and I are certainly guilty of this kind of back and forth. In the end, we end up doing nothing because we can’t decide which goal is the best one to attempt first.
Don’t worry about which is best. Instead, pick the goal that calls to you and that either feels most doable (spending less on date nights) or that is bothering you the most (increasing your retirement contributions). Focus on it for at least a month and then consider adding a new goal. Eventually, you’ll get to all the things that are important to you.
8. Share your progress (or lack thereof). Share how you’re doing on your goal with a social community. Blog about it, announce it on Twitter, find a financial website with an active online forum and join in (I like Mr. Money Mustache and Get Rich Slowly), or check in regularly with a friend who will hold you accountable. Working on goals is always a bit easier when you do it with others.
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