Start Your Financial Planning Journey with Realistic Expectations

If your goal is to rein in some of your discretionary spending or cut back on impulse purchases, plenty of hurdles are in your way. Sticking to any goal requires consistent discipline and self-control, which can be challenging in a world full of temptations and immediate gratification. You may have read or heard some of the statistics that say Americans are targeted with hundreds or even thousands of advertisements a day. We live in a society where we are constantly solicited to buy something. It’s easy to overspend when we are regularly marketed to.

Plus, financial emergencies do come up and need to be addressed. When setting financial goals for yourself, I would encourage you to prepare by setting the right expectations from the get-go. Know that you can’t change spending habits overnight, and be prepared for those soul-crushing emergency expenses because they will happen. The road to achieving your goals could be a bumpy one, so just be ready for it!

Build a System That Keeps You on Track

At the end of the day, it can be hard to set realistic financial goals and create a plan that you can stick to. The key is to find a system that works for you, because if you don’t, it’s easy to lose the motivation you started with in early January.

For example, everyone is told to budget and to be mindful of their spending, but most struggle with the accountability piece of this. Behavior change is a constant exercise, and it’s not easy at the beginning until that new behavior becomes a habit.

I’ve sat down and reviewed my expenses every two weeks of my adult life. I can’t say that it’s always “fun” to review this, but I do it to know where my money is going and if I’m sticking within my guardrails. People often think of budgeting almost as a prison sentence. In contrast, it’s been very liberating for me and has allowed me to have a healthier relationship with money, which is important to me. Consider developing a system that will keep you motivated and ultimately hold you accountable. Don’t be afraid to try different approaches.

Simplify Savings with Automations

Additionally, financial resolutions often involve long-term sacrifices, and the rewards may not feel immediate. Paying down debt or saving for retirement are both important goals to have, but the progress is slow and takes several years which causes people to get frustrated and give up.

A common financial resolution that people have is to increase their retirement savings. One way to establish good savings habits and to take the guesswork out of saving enough is to put your savings on autopilot. We like to joke that the best savers are the people who forget their password to their retirement plans, because they never log in to make any changes to their savings rate! Then, when they do get back into their account after a while, it’s exciting to see how much the account has grown over time without much effort.

Celebrate Milestones to Stay Motivated

I also think it’s important to make sure that you celebrate your success along the way to accomplishing your goals. If you are working hard to make financial changes in your life, be sure to recognize these efforts and celebrate when you’ve reached a milestone. One thing that has worked for my wife and I is that we treat ourselves to a nice dinner whenever we hit a new net worth milestone we’ve set for ourselves. Coming up with little ways to motivate and reward yourself is critical as you make progress.