Money is about maths, but personal finance has everything to do with mindset. Chances are, if you want to stick to a financial goal, you’ll have to tackle your own emotions at some point. Stay motivated by focusing on “quick wins”.
The debt snowball is a great example of the “quick wins” concept in action. Despite the maths, the snowball method is the most effective way to get rid of debt. With this method, you pay your smallest debts first, even though it makes more sense on paper to pay highest-interest debts. The snowball works because of quick wins: you see your progress faster, so you’re more likely to stick to to the plan in the long-term.
Think about this concept when it comes to other financial goals. For example, Certified Financial Planner Tom Gilmour tells LearnVest it works well with emergency funds:
As for applying this method to emergency funds, I usually advise people to save three to nine months’ worth of take-home pay — but I recommend celebrating once you hit the one-month milestone, even if it’s just treating yourself to a dinner out. This will help keep you focused on then nailing your goal at the two-month mark.
Best of all, the quick-win strategy can be applied to more than just massive goals. You can set up even smaller targets, like successfully completing a “$US0 day,” in which you resolve to go 24 hours without spending a single dime. Hitting these types of mini milestones can give you that powerful feeling of making progress, which can help motivate you to take on — and achieve — even bigger goals.
Everyone is different, and if you can easily separate your mindset from the maths, other methods might work better for you. But for the rest of us, quick wins can help with sticking to long-term money goals. Read the rest of LearnVest’s post at the link below.