With New Year's resolutions long abandoned, you're probably thinking you'll just wait until next year to set up another financial goal. But there's an easy trick to reaching your goals now. Here's how to set budget goals you'll actually reach.
With more than a third of 2017 behind us, how are you doing on your New Year's Resolutions? Have you stuck to your goals?
According to Statistic Brain, 41 percent of Americans make resolutions each year, yet only 9.2 percent feel like they achieve them. By six months into the year, only 45 percent of people still feel like they're on track.
So chances are you likely haven't stuck with your goals. Don't feel too bad about it, you're not the only one.
We're going to try and figure out how to set budget goals you'll actually reach.
The main problem is that people set sweeping goals
"I'll lose weight and have an awesome bikini body this year."
"I'm going to find the love of my life."
"I'm going to get my finances under control."
The thing is that these sweeping goals aren't very actionable. Broad, general statements don't make for powerful goals.
"I have $30,000 in debt and I'm going to develop a budget and figure out how much I can set aside and set a clear end date for paying off this debt."
Now that is an actionable goal. That goal gets even better if you crunch the numbers and can make it even more specific.
"I have $30,000 in debt and I'm going to set aside $800 a month to pay it off. I will pay it off in three years and two months. By 2018, my debt will only be $20,400. I'm going to also try to find a side job to bring in $400 this year so that can be an even $20,000 by 2018."
Yes, I realize I'm pretty much ignoring interest here, but you get the idea.
Or on a more positive note maybe it's a goal like:
"I have no debt and I want to save up $20,000 to a down payment on a house in two years. So I need to save $835 a month."
The more specific the plan, the more achievable the goal
The fact is, when you leave your goal big and vague, it can feel overwhelming. Crunching some actual numbers and coming to terms with your financial goals can help keep you moving in the right direction -- even if the numbers are kind of scary.
There's a reason that gym memberships spike in January. When you're excited about a new goal, you're more likely to put in the effort to achieve it. As time wears on, maintaining the motivation to keep going wears thinner, especially when you don't see immediate results.
This is where your clear set goal becomes important. Trying to tackle a giant goal like paying off $30,000 can seem like a never ending marathon, but breaking it down into an $800 goal each month can be a lot more attainable.
It also makes it easier to start over when life derails you. Despite your best efforts, the car might break down or your kid might get sick and it will eat into your debt repayment money. When you're vaguely throwing money at $30,000, that speed bump can make it feel like it's easier to give up.
Breaking down the goal can also help you visualize it differently
Earning an extra $800 a month is hard. It can seem nearly impossible when you're balancing a full time job and family commitments, but as you work on your marathon towards paying off $30,000 in $800 increments or raising $20,000, you can also develop extra tools to help you reach your finish line.
You can look into the forseeable future and decide if cutting cable for a short amount of time might be worth it. Now you only have to come up with $700 or $650.
Maybe you decide that iPhones are out for the next three years and something like Republic Wireless will get you through. That's another $100 off the family phone bill.
During your marathon, you can build your personal finances muscles by picking up books at the library, listening to great podcasts, and reading personal finance blogs.
The magic of breaking down your payments into a set plan is that you start to see how small things can really make a difference. Maybe the latte factor really is a thing and now that you've cut cable and reduced your phone bill, you can see how skipping a weekly Starbucks run and adding $20 to that debt repayment every month does actually make a little dent.
There are a lot of opportunities to make extra money
Let's be real though, some people are already incredibly frugal and not getting ahead. Try finding odd jobs and side hustles that can start cutting down your debt repayment number. Maybe it's one-time things like medical studies or consumer panels. Maybe you can squeeze in a little freelance writing during lunch. Maybe you can babysit the neighbors' kids two evenings a week.
You just have to find the right one for you. And with a set time frame, you know exactly how long you'll have to hustle harder, so saving will seem less impossible.
Remember
The trick to achieving your goals is to make them as specific and realistic as possible. Once you've done that, you just have to get yourself to keep on moving towards your goal.
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