Ever notice that when people decide to get on track in some area of their life, they tend to go big? I mean, who says, “This year I will eat sensibly and lose five pounds?” No, they decide this is the year to get back into their high school jeans, drop their body fat to 10% and run a marathon.
We can all imagine how that might turn out (think binge watching Netflix and an empty pint of ice cream…not speaking from personal experience of course).
But, what if you reframed your goals into something manageable—something small?
Take your finances. Instead of deciding this is the year to eliminate debt and build up a 12-month nest egg, what if you decided this was the year to pay off your most expensive credit card and save at least $400? (Did you know that according to a recent study by the Federal Reserve Board, four in 10 adults couldn’t cover a $400 emergency unless they borrowed money or sold something?*)
Here are four small steps to help get you there:
Step 1: Set realistic goals. Create goals that make the most sense for you, your family and your future.
Step 2: Track where your money goes. Write down all of your spending. And we do mean ALL of it, from your mortgage to the kids’ lunch money to your latte allowance. Do that for a month so you get a good feel for where your money is going. And think about the bigger expenses that might happen annually or semi-annually, like real estate payments and insurance and build those into your monthly total.
Step 3: Analyze your spending. Take an honest look at what you’re spending money on and see if it matches up with the goals you set in Step 1. And look at the timing. Are you spending too much right after payday and then having to pull out the credit card too often to make it to the next paycheck? Try using a budgeting tool like Summit Money Minder. It has loads of great features that can help you track and manage your spending and saving.
Step 4: Spend where it matters. Take what you’ve learned in Steps 1-3 and use it to change your habits around spending. The next time you’re ready to buy something, even something small, stop and ask yourself, “Does this match up with what’s important to me?” If the answer is “no,” back away from whatever it is and give yourself a big pat on the back for making choices that matter.
Now, start thinking small and prepare to own your better, BIGGER, financial future.