Though the New Year may bring with it a new opportunity to set and achieve financial goals, the thought of making sweeping changes to your budget and lifestyle may be overwhelming. What can you do to improve your odds of success in reaching the goals you've set? Below, we discuss three concrete steps to take to potentially make tackling your financial goals easier and more enjoyable.
Prioritize Your Goals
Not all goals are created equal. For example, paying off $10,000 in high-interest debt may have a far greater impact on your finances than setting aside $5 per pay period for holiday gifts. If you're hoping to reach several financial goals this year, it may be worth spending some time deciding which of these goals is most important to you and how achieving it fits into your overall plan.
On the other hand, if one goal is relatively easy to achieve when compared to the others, you may want to prioritize this goal. The satisfaction of checking it off your list may give you more motivation to tackle the tougher ones while also freeing up some extra cash to throw at these goals.
Break Goals Down into Smaller Chunks
As the saying goes, the only way to eat an elephant is one bite at a time. The same holds true for achieving your financial goals. When setting a lofty goal like "save $20,000 this year" or "pay off my student loans," it may be useful to schedule weekly, biweekly, or monthly smaller goals along the way.
You may want to schedule periodic increases in your retirement contribution rate, make an extra loan payment each month, or even refinance your loans or transfer balances to a lower-interest credit card to reduce the amount you need to pay each month. At the end of the year, even if you haven't quite met your larger goal, you may be able to gain the satisfaction of reaching the smaller ones. This may give you something to shoot for when outlining your goals for the next year.
Schedule Rewards Along the Way
Any deprivation diet—including a deprivation budget—may make it far more tempting to cheat. And though it may be satisfying to reach your financial goals, doing so at the expense of small pleasures may take some of the joy out of the process. By scheduling rewards or small luxuries along the way, you may be able to renew your motivation and avoid falling into the deprivation-overspending cycle.