1. Set SMART goals

A middle-age couple reviews their financial goals and plans on their computer

SMART is an acronym from business management that stands for specific, measurable, achievable, relevant and time-bound. Your financial goals must be detailed, driven by numbers, possible, tied to what you want to do with your life and given a deadline.

Without these factors in play, goals tend to be too loosely defined or unrelated to the rest of your life to do you much good. SMART goals help you achieve your dreams by making your financial mission clear and helping you visualize it in ways that promote action.

The starting point

“I want to be a millionaire.” This goal is slightly specific and measurable, but it’s not immediately achievable, not relevant to daily finance and doesn’t have a deadline.

A better goal

“I want a net worth of $1 million by retirement.” This statement follows all of the guidelines of a SMART goal.

A great goal

“I want to own my $600,000 house free and clear, have $300,000 in retirement savings and have $100,000 in ready cash by my 60th birthday.” This statement sets the beginnings of a plan for achieving these SMART goals.

2. Cut it in half (then do it again)

A woman walks on a small road in a European town as she holds a map

Many of our financial goals are enormous, at least compared to our daily, weekly and monthly money actions. While it’s good to aim high for goals like purchasing a home, taking a dream vacation or having a worry-free retirement, significant goals can feel so intimidating that there’s no point in doing anything toward making them happen today.

When a goal takes more than one or two months to accomplish, cut it in half. Then cut it in half again and again. Repeat until you get to a point where you have a number you can make meaningful progress toward this pay period.

The starting point

“I want to save $60,000 and take an extended cruise around the world.” For most people, this number is too large to do anything meaningful toward it in real time.

A better goal

“I will save $12,000 a year for the next five years to take that cruise around the world.” This goal is still a large number, but it’s more manageable and easier to cut into chunks of $1,000 a month.

A great goal

“I will save $500 from each of my biweekly paychecks toward my travel fund.” This goal explains what you’ll do each pay period and sets you up for immediate action as soon as you get paid.

3. Cheat with bonus money

A couple reviews their savings account online

Bonus money is income you receive outside of your regular cash flow. Some examples include annual bonuses, overtime pay, tax refunds, cash from a side hustle, stock dividends and gifts.

You don’t rely on bonus money for your normal financial operations. Most people like to use this extra money to splurge, whether that’s taking $20 left in a coat pocket to the pizzeria or open with a bonus from work. Instead, use half of any bonus money you receive to further your financial goals. You won’t miss it.

The starting point

You spend your entire tax refund on an entertainment system. It feels right at the moment but does nothing to move you closer to your financial goals.

A better goal

You put your entire annual bonus toward paying down a credit card. This strategy makes smart short-term sense and moves you toward your goals more quickly. However, it’s less fun and can be hard to maintain as a long-term habit.

A great goal

Take half of an unexpected overtime windfall, apply it toward vacation savings and spend the other half on a special dinner out with your spouse. By doing this, you’ll make further progress toward your goals while still celebrating in the present moment to keep you both motivated when the next bonus payment comes in.

4. Make it personal

A woman is pictured by her coastal home

The more emotional and personal you can get about your goals, the more likely you are to achieve them. This strategy works because finances are, by their nature, abstract. They’re numbers on a computer screen or printed statement showing you how much buying power you have in an increasingly impersonal and intangible economy.

But suppose you can connect those numbers to something you care about, like early retirement, a dream vacation, going to college or spoiling your children. In that case, it can give you a powerful emotional connection to your fiscal health. Think big, think vibrant, imagine details and get as personal as you can.

The starting point

You aim to retire early because your financial projections say you can if you continue saving money at your current rate. While this is a worthy goal, there’s nothing to connect with on a personal level.

A better goal

You aim to retire before age 65 to quit your job and spend time as you please. Time is a strong motivator, so framing your goal around an age and how you spend your day can provide strong motivation to stick to your goal.

A great goal

You aim to retire early to a small town on the coast and live in a house by the water. This goal paints a vibrant, beautiful picture of a life you can’t wait to start, making your goal even more real and compelling.

5. Tell one key person about your goal

A man and woman are seen chatting in a coffee shop and discussing their financial goals

When you set a goal, financial or otherwise, you usually do it while you’re excited and want to share it. However, researchers have discovered that, at a neurochemical level, the attention you get from talking about your goals rewards you the same way as if you had met them.

So, don’t talk about your intentions with everyone. Instead, here are three types of people you could share your goals with:

  • A coach or mentor, who has the role of pushing you to achieve goals you set.
  • An accountability partner, who exchanges encouragement with you on your various goals.
  • Someone who challenges you in a positive way, who you would be disappointed to tell if you fail to reach your goals.

All three of those people will help motivate you to succeed with your finances. As for the rest of the people you encounter in your life, keep your goals to yourself.

The starting point

You share your new financial goal, which you set as a New Year’s resolution, on social media. You get a big dopamine hit but no added accountability.

A better goal

You write down your goal and post it prominently somewhere only you can see it, such as inside your medicine cabinet, to avoid the trap of talking about your goals in public.

A great goal

You share your goal with your business coach, who will encourage you to achieve it with realistic steps.

Meeting your goals

Setting and achieving goals isn’t about how well you succeed in the initial weeks, but how well you stay on target when things get rough.

When things get tricky, these strategies can help keep you on track toward your goal, whether it's maintaining a budget, savings for a large purchase or creating financial autonomy. So, put them in place now. When things go wrong, it’s tough to find the time and mental energy to change your habits. Set yourself up for success now, and reap the benefits later.

Steven Stecker is a financial journalist in Omaha, Nebraska, where he writes about consumer financial strategies.

About the Author

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