7 Ways to Reach Your Financial Goals
A Slippery Slope
This article originally appeared on LearnVest.com.
I recently fell off my budget—or, rather, got pushed off by a large, unexpected expense at the dentist’s office.
I negotiated a payment plan so I wouldn’t have to pay more than $1,000 all in one go, but that night, as I was walking home, I became really irritated about the payments I’d have to make for the next few months.
Then, I saw—and was lured into—one of my favorite New York City institutions, the Strand bookstore, whose memorable tagline is “18 Miles of Books.”
That’s 18 miles of used books. Used books are cheap, right? Cheap.
That’s what I told myself as I proceeded to walk out with $75 worth of new reading material.
As I walked home, I thought, “I’m so far down the hole already anyway, what’s another $75?”
It turns out that this is a common way of thinking—about budgets, diets (“I already gorged on that cake last night, so what’s a little cookie?”), exercise (“I already missed two workouts, who cares if I miss a third?”) and more. But a few easy tricks can lift anyone out of a damaging downward spiral.
First, let’s figure out why so many of us fall prey to downward spirals in the first place.
Why We Dig Ourselves Deeper in a Hole
Carmen Wong Ulrich, personal finance expert and author of The Real Cost of Living ($15, amazon.com), says that once people fall off their budgets, they feel helpless. “You’re beyond the point of seeing yourself getting out. The pit is so big, it’s exhausting to look at, and that exhaustion wears down your ability to make a good decision.”
It’s a sad fact: Once one financial defeat saps our energy and willpower, we tend to make yet another bad decision, which makes us feel even worse, engendering yet another budget-busting decision, and so on.
So, how do you reverse course?
Stop Dwelling on the Negative
If you brood over how much you overspent, that number will seem bigger and more insurmountable in your mind—which means you’re more likely to do even more damage to your bottom line.
Fake It ’Til You Make It
If you find yourself in an endless circle of self-criticism (“I’m a terrible budgeter. I can’t manage money.”), you’re creating a self-fulfilling prophecy. Instead, tell yourself the opposite: “Every day I’m getting better at budgeting. It’s only a matter of time before I’m back on track.” Then, start to take baby steps to get back on budget. Soon, your track record will reflect your inner soundtrack.
Write Down Your Budgeting Victories
Your log might look a bit like this: “Tuesday: I packed my lunch last night, so I spent $3 rather than $10. Wednesday: Needed a new cardigan, nabbed a thrift store steal for $15!” Celebrating each small victory will boost your confidence in your ability to stay the course.
Start Logging Every Purchase
This will make you conscious of your spending in a hurry. In fact, your budget might benefit from “the Prius effect:” Prius drivers, whose cars display how much gas they are using at any given moment, tend to begin adjusting their driving style to use the least amount of fuel possible. If, when you’re standing in line at the register, you know you’ll have to record that $100 you blew on that cute dress and jacket, you’ll be likelier to leave the store empty-handed.
Anticipate How Good It Will Feel to Reach Your Goal
Take the amount you’ve overspent (more than $1,000 in my case) and decide how much less you’ll spend each week until you make up that amount. (Say, $100 less for 10 weeks.) At each milestone along the way—quarter of the way there, halfway, three-quarters—celebrate how far you’ve come and imagine how good it will feel when that debt is paid off.
Offer Yourself a Reward
For some people, just reaching a zero balance is enough reward in itself, says Wong Ulrich. For others, knowing that a treat awaits them at the end of the road will motivate them. If you’re in the latter camp, say to yourself, “When I’ve dug myself out of this hole completely, I can treat myself to that new body scrub.”
If you’re looking to turn around persistent bad budgeting behavior, Wong Ulrich suggests you ask yourself, “What will my life look like five years from now if I continue like this?” If your debt continues to grow, how will that affect your dreams, such as for your future home, your family, etc.? On the flip side, if you envision your ideal future, what does that look like? Find a picture to encapsulate your ideal future (a beautiful home, a tropical beach, your kids smiling back at you), print it out, and put it somewhere you’ll see it regularly. This is what you’re working toward.
Do the Math
Although I was able to work out a payment plan for my big expense, sometimes a financial hiccup means you have to charge it. If that credit card balance is weighing on your mind, break your debt repayment down into easy steps. Wong Ulrich says having a solid plan will make getting out of debt seem less scary and more doable.