How to Balance Your Financial Responsibilities With Your Monetary Goals
How can you achieve your monetary goal when someone else is always fighting for your limited funds? This is what we are reviewing this week.
Every Monday, we address one of your pressing personal finance questions by seeking advice from several financial experts. If you have a general question or money issue, or just want to talk about something PeFi-related, leave it in the comments or email me at [email protected].
This week a question from Molly:
I don’t make a ton of money yet, and after renting, groceries, bills, and some savings, I don’t have much discretionary money left over. I have a financial goal besides saving, but there is always something more pressing than my goal, and I end up spending what little I have. Once that happens, it will be difficult for me to focus again on my goals and make smart money decisions.
How can I balance all my goals, wants and needs when there is always something else that prevents me from saving the money I need for that purpose? It’s important to me, or at least I keep telling myself that it’s important, and yet it seems to me that I cannot save. You can help?
This is what individual experts usually say about a problem that affects each person differently: if you need personalized advice, you should see a financial planner.
Find your motivation
In many ways, this is the main question about money: how do you balance everything in order to make responsible financial decisions, save on goals, and still have fun?
This is the question I ask myself every day. And the truth is, saving for any purpose will be difficult. Unless you were born into a wealthy family, chances are you wo n’t be able to do all of this. I want to put off at least three different “big” goals at the same time, plus pay my rent on time, eat well, maybe attend classes to advance my career , explore the city, hang out with friends, etc. good for my age, but I definitely don’t do what a lot of people in New York do. So you have to give something.
There are always trade-offs. To be successful at any goal, you need to develop a habit, and you will often have to remind yourself why you are doing it. Then you will need to find a way to motivate yourself.
The last part is key for me. It’s so easy to fall behind, especially when it comes to saving, and then convince ourselves that everything is okay and we will catch up next month. And then the next month comes, and we want to go to the concert, and suddenly we haven’t been saving anything for two months. The next month goes by and we decide to buy some shiny things, and then three months have passed and we still haven’t made any progress. Etc.
The truth is, there will always be something seductive, something that we think we need something that we did not plan. But when you have the right motivation to focus on, you’re less likely to be distracted by all the shiny things floating around.
So consider this: Do you want to start your own business, achieve financial freedom early, or just work on what you want without feeling obligated to anyone? Why is this important to you? Write it down somewhere, and then write down some specific steps you can take to achieve it.
Later…
Do the work
The hardest part of it all is getting the job done. Often people discuss the same problem day after day, year after year, and they don’t change anything. Then they complain and want simple solutions. But there are no shortcuts – for example, if you want to pay off your student loan debt, you have to make monthly payments until you pay back what you borrowed, perhaps over the next few decades. You need to slowly but steadily give it up every month. Likewise, if you want to save $ 5,000, you cannot just make that money exist; you really should be saving $ 5,000, little by little. It’s boring.
Once you acknowledge that it will take time to reach the big goal of saving, paying off debt, or starting your own business, the best thing you can do now is:
- Live within your means.
- Develop a savings habit.
- Set aside anything (anything!) For retirement.
- Pay off all the debts you have.
- Learn the basics of investing and building wealth.
- Work towards your goal.
Once you have these building blocks, you can better achieve your goals. This may not happen overnight, or even within a year or two. But with consistency, you get it.
To stay motivated, divide one big goal into smaller ones. As Jocelyn K. Gley, creator of the Hurry Slowly podcast, writes on her blog , people are goal-oriented. We need to finish something, cross it off our list, to feel a sense of accomplishment. This gives us the dopamine we need to keep working. So, if your goal is to save $ 5,000, break it down into smaller weekly or monthly goals to keep your dopamine doses coming in.
Then follow your progress in a magazine or app . Glei offers to stick a grid of all your tasks, track your progress on a daily calendar, or keep a diary or diary for five minutes each day. Whichever you choose, remember that consistency is key.
Along the way, you will get rid of things that are not so important to you. You will find out through trial and error. Everyone is wrong, but it is the ability to bounce back from it, return to your motivation and make real changes to move towards your goal, which will ultimately lead you to it. You can live three months without saving a dime, but as long as you find motivation in the fourth month to make some progress towards your goal, you will be fine.