Everyone knows that if you want to get your finances in order and start being smart about your financial future, you need to make a financial plan. And there is lots of terrific advice out there from personal finance experts on what should go into that plan. But knowing how to stick to your plan, whatever it might be, is the really critical part of the puzzle, and it's the part we pay the least attention to. Understanding how to stick to a plan once you've made it isn't a financial issue, it's a motivational one. Luckily, there are very effective strategies you can use to make sure you follow through on your good financial intentions.
Tip #1: Be very specific about what you want to achieve. "Saving money each month" sounds like a good step, but how much money? "Pay off credit card debt" is a great idea, but how quickly? How much will you pay, and on which cards? When the steps in our plans are vague, like "spend less here" or "save more there," there is way too much wiggle room. We find ourselves settling for very small changes in the right direction, when actually, people are much more motivated when working toward challenging goals. Be specific, and set the bar high.
Tip #2: You need to make sure that your plan includes concrete actions you are going to take in order to reach your financial goals. Turn "spend less money eating out" into "I'll bring lunch with me to work each day, and eat out no more than once a week." One of the most common reasons we fail to reach our goals and stick to our plans is that we don't translate what we want to accomplish into real, everyday behavior. "Cut down on my clothing expenses" needs to become "spend no more than $____ on clothes each month," or you'll never succeed in making real change.
Tips #3-5: Most of us are guilty of buying things we don't really need. If your finances are in a sorry state, you will definitely need to get a handle on your impulse buying, and fast. Out-of-control spending is just another example of succumbing to temptation -- for some of us it's doughnuts or chocolates, for others it's gadgets and designer shoes. Tips #3-5 are simple strategies you can use to help you resist the temptation to spend.
Tip #3: Never, ever shop as a pick-me-up. When you are tired, anxious, stressed, or depressed, your self-control will be at its weakest. This is a perfect recipe for a bad decision.
Tip #4: When you are faced with the temptation to splurge, it can help if you stop and think about someone you know who has lots of self-control -- someone who is financially responsible. Self-control is actually contagious, and studies show that just thinking about someone who has it can boost your own.
Tip #5: Finally, reward yourself for good behavior. Everyone needs incentives. When you have a fiscally responsible week, or month, treat yourself to something you want that won't totally blow your budget. For some of us, there just isn't enough inherent satisfaction in being frugal to keep you motivated, so reward yourself with something that speaks to you.