Why is sticking to a budget so difficult? The answer for most of us lies in our inability to stay focused and motivated. Surprise, surprise, I bet you knew that already! We start off strong, but inevidably most of us fail, with only a few having the discipline to carry through to their financial goals.
If you think about it, starting a budget is really no different than starting a new diet and exercise routine. How many of us have started off on a new “health kick” with enthusiasm and passion using better health and appearance as our inspiration? We eat right, exercise religiously, and vow never again to go back to our gluttonous habits.
After a few weeks, the results that we were hoping for never materialize (at least not as fast as we hoped). We begin to feel that we are putting in way more than we are getting back. Junk foods find their way back into our diet, our exercise routines get shorter, and eventually we end up back where we started from (or worse).
Does this roller coaster pattern sound similar to the success you’ve had sticking to your financial plan or budget? If so, you may find value in some of the techniques I used during our debt elimination period that helped my family stay focused on our budget.
- Establish a Reasonable (ie Sustainable) Budget: You and your family may have come up with a great financial plan that forecasts you reaching your financial goal withing 2 years. Unfortunately, this new plan leaves little room for anything else. You need to be careful here…if you don’t leave enough room in your budget for fun, the pain of sacrificing will eventually become too large of an obstacle to overcome.
- Set Personal Finance Goals: Goals are one of the essential motivational tools. Whether your financial goal is to become debt free, fund college for your children, save up a down payment for a house, or buy a Hinckley sailboat and sail around the world, goals are the nourishment that feed or motivation. They allow us to “keep our eye on the prize” literally!
- Define and Measure Financial Milestones: Setting a goal is great, but in many cases the goal can not realistically be achieved for many years. To help instill a sense that you are moving forward in meeting your goal, consider plotting out your progress towards the way. When we were actively paying down debt, I set up a graph showing how much we had to pay each month to be completely debt free by a particular date. From that I drew out a graph of the expected outstanding debt balance of each month until that date. As each month went by, I would plot on this graph how much debt I had actually paid off and compare that to what I “needed” to pay off. This was a great tool and inspired me each month to “beat the curve”.
The moral here (if you haven’t figured it out) is that the tortoise always wins! You can very easily burn yourself out in your quest for any of life’s great pursuits. What have you done to stay motivated and passionate about your financial plans?
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