Do you take time to set financial goals and then celebrate their achievement, even when they’re relatively modest? If not, then maybe you should start doing so.
Despite solid growth over the past two years, many Americans find the current economy challenging. In a recent survey, about three out of every 10 people indicated they were struggling financially, or just getting by. The financial statistics bear this out. The average American household has accumulated $16,000 in credit card debt, and many people have difficulty even imagining being debt-free.
Facing challenges like these, it’s no surprise that financial issues are the top stressor weighing on Americans’ well-being. It doesn’t have to be that way, though. One of the best methods to address all the stress that money matters put on you is to break large goals down into smaller ones, and note when you complete them. Let’s look at why little victories are so important along the road to financial success.
Visualize the Journey
There’s an old, wise saying:
How do you eat an elephant? One bite at a time.
While it can apply to many things in life, it’s especially useful when viewing financial goals. Most financial objectives we set for ourselves – paying off debts, purchasing a home, or saving for retirement – can take a very long time to achieve. Sometimes, the goal itself can seem so large and intimidating that it can be difficult to visualize a path to achieving it at all. Break it down!
Taking a large objective and breaking it down into a series of smaller goals can help keep you focused and on track for the long haul. For example, it may be hard to imagine saving $500,000 for retirement when you’re 25. However, setting a financial goal of having $45,000 invested by 30 may be easier for to visualize. In addition, with a set of similar milestones set along a timeline, you can often orient yourself better toward achieve larger goals. Just cut that elephant up into smaller pieces!
For many, improving a financial situation is a long, hard road. After all, if you’ve accumulated $16,000 in credit card debt, and you have other bills to deal with, it may take you years to pay down that debt. If you don’t maintain your mental discipline, it can be easy to go astray and never get those cards paid off. Therefore, set several small milestones along your path to paying off your debt, and celebrate the times when you actually achieve them.
Perhaps you have $12,000 worth of credit card debt spread across four or five cards. Focus on getting one of them paid off (perhaps using the debt snowball or debt avalanche technique). Achieving even modest results like this can be a big deal, too; according to a study, the single most powerful factor to maintaining the motivation to achieve objectives is continual and meaningful progress. Achieving a milestone can also help you offset any setbacks you may have experienced along the way to meeting your goals. So, take a moment to recognize your hard work and discipline when you pay that card off!
It’s no fun to be holding a big “to do” checklist in your hand. However, you often gain a sense of accomplishment when you start methodically checking items off your list. Once you start checking off items, you often have a feeling of something important: momentum. If you feel unstoppable as you continue checking off items, the odds are good that you’re going to complete it sooner rather than later. Financial milestones can work in much the same way.
If you break your big financial objectives down into smaller milestones, you may find that your progress accelerates over time. For example, while it may have seemed hard at first to pay off all your credit card debt, you may find yourself pumped up after two of those cards are paid off; the remaining cards may end up having a zero balance much faster than originally planned. Similarly, when you find yourself achieving two to three of your retirement milestones, the next few micro-goals may come faster than expected as well. Therefore, start achieving those milestones and you may find yourself possessing unstoppable momentum.
Keep Pressing Forward!
Don’t let your daunting financial goals break you down. Instead, break those goals down into smaller, more modest milestones, and take the time to note when you finish them off. Doing so can help you visualize your plan of attack, stay focused, and build the momentum you need to overcome setbacks and get to the finish line. Good luck on your journey!