Being smart about your finances is hard. Really hard. First, just consider all the temptations we face every day. Not only are there shiny objects we can purchase everywhere we look, we are also bombarded with messages all day long about how wonderful our lives would be – if we spend our money on certain acquisitions.
Making meaningful changes of any sort in our lives requires work, persistence, and diligence. Sadly, there are no easy fixes. Money is no different. If we want more freedom and flexibility with our finances, we must take certain steps to get there, steps that require making some tough decisions and exercising discipline.
Changing our mindset about our money and taking the necessary steps to achieve our financial goals require two important steps. First, determine your why. Then build financial muscle through power habits.
What is Your Why?
Obscure, indefinite, and overly broad goals never get you very far. If you know where you want to be financially and have a goal defined, take the next step forward. Dig in and ask yourself, “Why is this goal important to me?” When you have the answer, ask the question again, “Why is THAT important to me?” Ask this repeatedly to drill down to the essence of your goal. Here’s a common example.
Goal: I want to be out of debt by December 31, 2023.
“Why is this goal important to me?” I want to be out of debt, so I can quit my job and follow my passion.
“Why is that important to me?” Quitting my job would allow me to spend more time pursuing the avocation I am passionate about and give me more time with my family.
“Why is that important to me?” I feel guilty about how much time I spend at work and away from my family, but my income is necessary to pay our bills.
“Why is that important to me?” My kids will only be young once, and I want to be with them as much as possible, as soon as possible.
Keep drilling until you’ve gotten to your core “why.” Only when you reach and identify the underlying emotions motivating you towards a goal will you realize the essential why. Keeping your essential why at the forefront of your thinking will give the goal the necessary gravity required to make it a reality.
Of course, I could have taken that example in another direction: Perhaps you want to spend more time with your kids NOW versus five years from now. Everyone’s goal and essential why will be different.
Build Power Habits
Once you are rock solid on the essential why behind your financial (or any) goals, you must create habits that will allow you to achieve those goals. And this is an important distinction: while it’s critical to set goals and develop the steps necessary to arrive at those goals, developing power habits designed to accomplish those steps is what really matters.
Here are some suggested power habits that you can practice to reach your debt-free goal:
- Track expenses daily to identify areas to trim in order to pay extra on debts.
- Create a chart and mark off the payments made on the way to the goal.
- Check principal balance monthly to stay inspired and to reinforce your goal.
- Increase the extra payment by $20 each week to accelerate the effort.
Forming good habits is key, regardless of the goal you have in mind. But what is a power habit?
A power habit is a firmly embedded, rock-steady habit you practice no matter what. Once in place, power habits allow you to engage in habit stacking. Stacking habits is an essential skill to develop if you want to accomplish any goal in life. You probably already stack habits and don’t think about it, such as your wake-up routine: Get up, start coffee maker, use the bathroom, check phone, shower, etc.
Adding a power habit intended to improve your wake-up routine might be to drink a big glass of water. Lock that habit into place and you may find yourself inspired to add other more healthful habits to your morning routine. Perhaps you cut down your coffee consumption or add a few minutes of stretching or yoga.
Power habits are inspiring. They are also likely to become habits you soon can’t live without. For some people, that habit might be early morning running. (I am not that person, but I aspire to be!) In my debt pay-off example above, the daily tracking of expenses would be a power habit. Once established, the rest of the habits on the list become more attainable.
I used to think that what I needed was discipline and willpower to achieve my goals. But what I really needed were new habits. Habits ultimately shape the outcome of goals.
If you want motivation and focus in achieving a goal, dig down and determine your essential why. Then pick one powerful habit you can establish to put you on the path to reaching your goal. Once that power habit is solid, stack another power habit on top. Before you know it, your goal will be within reach.
What is your method for achieving big goals? Do you dig for your why? Share your experiences!