Lower The Bar
When you are trying to get better at managing your money, it’s easy to become discouraged if you suffer early setbacks.
We are more likely to fail to turn good intentions into good outcomes if we have unrealistic expectations. Motivation, always a fair-weather and fickle friend, will wane, and we find it harder to maintain the right financial habits and behaviours.
I’ll cover motivation and capability in a future post, but right now, I want to focus on expectations.
If you set financial expectations that you never meet, or consistently fall short of, then it can undermine your confidence. It gives fuel to that little voice in your head that you are no good with money or you’ll never get ahead. Either way, it chips away at your motivation and makes it harder to continue with good money habits.
For example, if you have nothing, or very little, in your emergency fund, then defining success as saving £2,500 might be what you’d like to have. But it’s also likely to mean you’ve set yourself up for failure before you even start.
Mark Out Your Milestones
It is far better to have an aspiration to eventually have £2,500 in your emergency fund, than a hard and fast goal. An aspiration sets the general direction of travel for your daily money habits, without the binary outcome of win/fail, should you not accumulate £2,500.
If you set a tiny milestone, say, of first getting to £100, that is much more achievable. It will also enable you to deploy a second success strategy, that of celebration.
No matter how small your achievement or milestones, success is success. Celebrating that success immediately, in whatever way works best for you, will make you feel good. And when you feel good, you are more likely to stay the course and continue the daily habits that underpin further progress.
"No matter how small your achievement or milestones, success is success." Tweet This
For example, recently, I had to create and carefully check the spending forecast and related cashflow for my house self-build project. A boring, but essential task to ensure I can pay for all the building costs as and when they fall due.
When I had completed the task, I immediately celebrated in my favourite way, by saying out loud “Yes!”. At the same time, I clenched my fist and punched the air. It made me feel good and inspired to tackle other necessary, but not very exciting, money-related tasks.
A Step-By-Step Attitude
By combining easy milestones with immediate celebration when we reach them, we create a positive feedback loop. We see ourselves making progress and start to believe that we are the sort of person who is good with their money, and we can get ahead financially.
Going back to our emergency fund example, once we hit £100, perhaps we then aim for £250. When we hit £250, we then focus on getting to £500, and so on until we hit the amount we aspire to have. And if we don’t hit the next milestone, or we fall back, because we have to raid our emergency fund for some reason, we haven’t failed. We are merely learning the habit of saving.
So in summary, set tiny financial milestones, celebrate when you reach them, accept setbacks and missteps, restate and work towards the previous money milestone, and keep making progress.
Watch the summary of the points above in the Money Minute below.
