I have not invented or discovered any of the ideas behind basic personal finance. Everything I say will have been said by many different people at many different times, and probably – likely even – in a more eloquent way. The basic gems of money management are obvious common sense. And while I do think most people understand the basics, they perhaps lack the organization and implementation skills and, more importantly, a way to stay motivated.
Here is how I stay motivated.
First, refine your goal. Get out of debt? Retire early? Save for vacation? Move to a new city? The more concrete and clear the goal, the easier it will be to reach it. “Retire early” is item #7 on my life’s bucket list, but quibbling about the definition of retirement is not mathematical enough for me, so I quantified this bucket list item as “Generate enough passive income to cover my expenses.”
Small mini-goals are good starters. Pick one loan to pay off, one expense your passive income will cover, one dime at a time and celebrate the victories as they come. When you realize that you have control, the bigger goals seem a lot less scary. People have a tendency to overestimate what they can accomplish in a day, but underestimate what they can accomplish in a year. Play the long game and change what you do one day at a time.
Then, create some sort of visual aid that you can update as you progress towards your goal. I love charts personally. If you can make something pretty that you can hang up on your closet door and see everyday and update every week or every month, you’ll be much more inclined to achieve that goal. Since this is a personal finance blog, the goals I help people reach are very quantifiable and easy to translate into visual aids, but this approach can work for virtually any goal you can think of.
I like this approach for a lot of reasons. You manage what you measure. Or put another way, you can’t manage what you don’t measure. Using a visual aid can help you navigate your financial world, forcing you to track your behavior, and tricking yourself into managing your money. For a lot of people, the trouble in keeping your financial avatar healthy is being fuzzy with the details. Numbers don’t lie. Tracking your spending is half the battle.
The daily eye candy can also keep you motivated. Everyone has vague notions of how they should be “saving more money” and “paying off debt” and “getting rich,” but the constant reminder of the prize, the specific attainable prize, will help you put the notions into action. Finally, a visual aid can help keep you accountable. Everyone can have expensive months and slip up. When you experience the thrill of a thrifty month and how much closer it brings you to your goal compared to the pain of charting an expensive month, you start to change your behavior.
And changing your behavior is the hardest part.