There are many reasons why people don’t stick to a budget. For me, I’d say it was boredom. For a couple of years, I managed to spend an hour or so updating my transactions in Mint and checking my budget every other Friday on my day off. After awhile, I started to feel burned out and missed a couple of sessions. Before I knew it, I wasn’t looking at Mint at all because other things slowly became more important.
Sticking to any goal can be difficult, especially if you don’t adequately prepare for it from the beginning. Having a healthy financial status depends on building healthy habits, the most important being monitoring cash flow on a regular basis. Read on to find out five key components of goal setting to help you do just that.
A Strong Enough Reason
Animals will do certain activities because it is their basic instinct to do so for survival, but humans are wired a little differently. We still have basic instinct, but that is not always enough. We need motivation or a strong enough reason to continue doing something once we start (getting started is a whole other topic!). Finances can be boring, but it doesn’t have to be if you connect it with what you really want to get out of building a healthy financial status.
Be very specific and make it enjoyable. Write it down and post it somewhere you will see it so that you won’t forget. Made-up Example: I want to pay off $10,000 in credit card debt and build up a $1000 emergency fund, so I can have room to add a regular date night to my budget. You see how I added the fun part at the end? Just paying off debt and saving by itself may not be exciting enough to keep you working towards it.
Daily Consistent Action
Having a specific and enjoyable strong enough reason for working on your finances sets a firm foundation, but this next part is really essential for pulling it all off. And that is a consistent and realistic action that’s easy to do daily. I spoke to one of my mentors recently and he shared that he wanted to get down to 200 lbs. at 10% body fat and become healthier overall. He knew that it was not going to happen overnight and that his success would initially depend on his eating habits. So he chose an action that he could easily do on a daily basis. He entered everything he ate, his weight, and body fat every day. That’s it.
He didn’t commit to excluding any foods from his diet or exercising every week (which is his next goal). He just wrote what he ate and his weight data daily – very simple. How can we apply this to being financially healthy? Easy! If we focus on tracking our spending, naturally our financial awareness and choices will be influenced in a positive way, just like my friend was able to lose weight by paying attention to what he was eating every day and writing it down.
Positive Reward, Negative Consequence
Well that last bit was just great, but I can hear you now saying to yourself, I’m just not disciplined to do that every day. No worries. Naturally it takes a while to form a habit and so our brains could use a little push toward making this happen. I’m sure you’ve heard that we act out of a desire for pleasure or fear of pain. Well, there’s no exception to that here. By choosing a positive reward or negative consequence to connect to your consistent action, you make it that much easier to force yourself to do it, at least until the habit forms and becomes routine. I actually recommend setting up both.
Decide on how you will reward yourself at the end of a period of consistent action and write that down under your strong enough reason for doing it. Under that, come up with a negative consequence that will be enforced if you miss a day. My mentor’s consequence was that he’d have to donate $1000 towards the campaign of a presidential candidate he doesn’t like (his name starts with a ’T’ and rhymes with ump) AND publicly endorse him. Ouch! Hits to the wallet and public embarrassment are double doses of pain that anyone would want to avoid.
At this point, we’ve come up with a strong enough reason, figured out the consistent action that will make it happen, and decided on a negative consequence and positive reward to keep us motivated. So how do we keep our word and who’s going to hold us to it? Most goals are successful because there’s some form of accountability built in. My next recommendation is perfect because it combines accountability and negative consequence.
Stickk.com is a goal-setting web service that allows you to define your goal, acknowledge what it’ll take to accomplish it, and leverage the power of putting money on the line to turn that goal into a reality. I’ve used it myself, and it’s very easy to get started.
You select your goal, set the stakes (what you will commit to doing, and what you will pay to whom), choose a Referee (the person who will keep you accountable), and add Supporters via social media if you like.
A Referee is a person that will be responsible for verifying on the website that you performed the action, but you can also choose not to have one and report yourself. You should only do this though if you trust yourself to tell the truth.
Where it really gets fun is choosing the charity or anti-charity that your money will support if you don’t follow through. When I was signed up, I put down that I would support a group whose cause I don’t morally agree with if I didn’t upload a vlog video to YouTube daily. Unfortunately, I ended up paying them $25, which was painful. You can also choose to support a person or cause you do like. Stickk gives a lot of options and takes care of sending the money for you.
To make it less intimidating to get started and to make the whole operation flexible, choose a trial period to test out your goal and consistent action. A good rule of thumb is 30 days. At the end of that, check on your progress and evaluate your ability to perform the consistent action on a daily basis. You can always tweak the commitment if the consistent action is too difficult or not challenging enough. If the 30-day period was a success, the habit should be cemented into your brain, and it should feel like a natural part of your routine. Where you go from there is up to you!
My Personal 30-Day Challenge
If you notice, this plan of action doesn’t really focus so much on the results, but the action that you are taking to get those results. That is because the results are something we may not be able to control, but our action surely is. One of my favorite quotes from Jeffrey Combs is “Success is not what you do, but what you do daily.” I wrote this for me as well as you, because monitoring my finances has been really sporadic lately and I’d like to do better. So my strong enough reason statement is this:
I want to curb my monthly spending to a max of $2600 so that I can stretch my money as far as possible (I’ll explain why in an upcoming post) and be able to afford a few fun vacations I have planned this year (Essence Festival in New Orleans and Miami to visit my baby sister.) I know this is possible because the last two months I’ve been well below that amount, but wanted to be a little conservative just in case. How much I spend each month is not always under my control due to unexpected expenses, but I can be aware of the expenses I do control and influence my spending choices by checking my accounts daily.
My positive reward at the end of my 30 days will be a spa pedicure because I’ve gotten into the habit of painting my own toes to save money. Letting someone else do it will be a treat! My negative consequence will be donating $125 every week that I don’t daily check my bank accounts. I opted to be less controversial this time, so I gave Stickk permission to send the money to a charity of its choosing. I don’t intend for that to happen, though! You can follow me on Stickk to see my progress and the comments written in my commitment journal. Just send me a friend request and I’ll respond. My start day is this upcoming Friday, March 11th. I’d love to get your support and hopefully see you commit to a goal of your own, even if it’s not finance related.
Now it’s your turn. If you’re game to join the challenge for financial health starting Friday March 11th, share your strong enough reason statement in the comment section below and join me on Stickk.com.