You know how to handle your money: you've got a budget, a plan to save, and you're kicking your debt. But now what? This is the time where a lot of people with good money sense fall off the wagon. If you've hit a plateau with your financial goals, it's important to stay on track and motivated. Here's how.
Why It's a Problem
On the surface, a plateau doesn't seem like much of a problem. Everything is going according to plan, so what's the big deal?
The problem is, a lot of people get bored with their finances during this stage. Don't get me wrong, your finances don't have to be exciting — in fact, we're big fans of automating them so you don't have to think about them too much at all. There are a couple of ways getting bored can derail you, though.
First, it's easy to just forget about your goals at this point. The excitement has worn off, and you've forgotten how badly you want to straighten out your money. Your emotions have waned, and you go back to your old, spendthrift ways.
Another problem: your goal can stagnate during the plateau stage: you don't let the goal evolve. For example, not too long ago, I was at my own plateau. I optimised my budget, automatically saved some of my paycheck, and still got to enjoy a little fun money. Everything was on track, and I didn't have to think much about my finances at all. During that time, though, my income increased. Instead of tossing more money at my goal, I just spent my extra income, because I was so used to not worrying about my plan. As a result, I spent my new income mindlessly (a ridiculous amount was restaurant spending). There's nothing inherently wrong with that, but I'd rather put my money to work in other places.
It's also easy to simply get restless during this phase. We're eager to improve our finances even more, but we know there's only so much to do in the meantime. It's an unexciting stage. To avoid all this, you want to make the most of your plateau so you can move past it.
Set Smaller, Exciting Milestones
If your money goal, whether it's paying off debt or saving for something, feels too far away, make it more present with smaller milestones.
Let's say you're finally earning enough to pay off your bank debt beyond the minimum. So you come up with a long-term debt payoff plan. During that time, it's easy to put your goal on autopilot and lose track of it or forget about it altogether. To avoid this, make it your goal to pay off $5000 worth of debt a year (or whatever works for your budget). That keeps the goal present, and you'll be much more apt to work on it and even boost your payments if it's present. Just thinking about your goal in the shorter-term can keep you from getting bored with it.
And don't forget to celebrate. After you reach your goal, indulge in a ritual to acknowledge it, whether it's cracking open a tall boy, treating yourself to a massage, or just sharing the news with someone who gives a hoot.
Even if your goal is just financial stability — getting to a place where you're comfortable with money — giving yourself a reason to celebrate can keep you engaged with your finances.
It helps to make your goal exciting, too. I know, the words financial goal don't exactly have you jumping up and down. When you think about it, though, getting out of debt, saving for an emergency, and funding your retirement are designed to help you gain control of your money, which actually is pretty exciting. Your goal should stimulate you; ask yourself why you want to reach it in the first place. In order to excite you, your goal should also be specific and attainable.
For example, let's say your goal is to "get out of debt because that's the responsible thing to do." Well, that's pretty unexciting. Instead, try something like, "Pay $US1,000 ($1,417) worth of credit card debt this year so I can finally start saving up for my trip to Rome." That's specific, attainable, and it sounds a lot more fun. The plateau isn't too bad when you know there's a trip to Rome at the end of it.
A challenge here and there can help keep your long-term goal actionable, too. Maybe it's saving a little more each week. Or asking for a raise. Or negotiating your monthly expenses. Either way, the occasional challenge can help you supercharge your goals. Join ours!
Beware the "Why Am I Doing This?" Phase
During your plateau phase, it's natural to run into a mini-existential crisis, also known as the "why am I doing this?" phase.
Again, the novelty of being financially secure wears off, you get restless, and you start to wonder what the point of managing your money is in the first place. To shake off this mindset, focus on your own drive rather than the results of the goal itself. Here's how performance analysts Avidium puts it:
Focus on why it's really important to you to achieve this goal. Your reasons could stem from a huge challenge, from your pain, someone else's pain, an image, etc. Think hard, and make these reasons as emotional as possible, as we are all driven by our emotions, no matter how rational we think we are. Be careful not to focus on benefits here... Instead, simply list why it's important for you to achieve this result.
For example, if you want to get out of debt, yes, the result is you'll be debt free, and that's awesome. It's financially responsible and smart. But why does it matter to you? Your answer might be:
- Because I don't want debt collectors calling me for the rest of my life.
- Because I want to improve my credit so I can buy a home in a few years.
- Because I want to stop throwing money down the toilet on interest so I can finally save up for my dream vacation.
Again, during the "why?" phase, helps to make your answer specific and attainable. Get back in touch with why your goal matters to you.
Learn to Love Your Routine
You can do a little here and there to make your goal more exciting, but at some point, you will be faced with the same old boring routine. There's only so much celebrating you can do when you're saving for a retirement that's 25 years away.
Instead of trying to fight it, learn to love it. We tend to focus on the end product of our goal and define success as getting to that end point. Instead, make the process your focus and define success in those terms. Here's how James Clear puts it:
But if you look at the people who are consistently achieving their goals, you start to realise that it's not the events or the results that make them different. It's their commitment to the process. They fall in love with the daily practice, not the individual event. Fall in love with boredom. Fall in love with repetition and practice. Fall in love with the process of what you do and let the results take care of themselves.
Focusing on the process is particularly helpful when it comes to making sure your goal evolves. Maybe you get a raise. Maybe you lose your job. Maybe you have children. Whatever changes occur in your life, grow your goal right along with them. This keeps the goal attainable and present.
Getting back to basics can help you focus on the process, too. The Art of Manliness explains:
Sometimes changing things up can help us break through a plateau, but in my experience, I just waste more time searching for that new, magic thing that will change my life for the better. So instead of spending time on searching for the new, I start focusing on the basics. When I hit a plateau with my writing, I'll review my composition skills by doing some exercises from a book. When I hit a plateau with my weight lifting, I'll reduce the weight, focus on my form, and slowly start adding weight again…In numerous occasions, I've found that even when you're advanced at something, delving back into the basics can actually give you fresh insights that help you progress even further.
This can apply to pretty much any goal, but it's especially true for personal finance. The more you learn about money, the easier it is to overlook the basics. For example, I recently took a hard look at my budget and realised I haven't been nearly as frugal as I used to be. And that's fine — personal finance is about more than being frugal, and in the past year or so, I've focused on earning more money rather than saving it. At the same time, I've also been kind of wasteful and mindless about my spending, because I've overlooked one of the easiest, most basic tenets of personal finance: spend less. When I reevaluated my budget, I realised I could be saving a lot more cash without even missing it. And now that I have more financial insight, I can see the opportunity cost of missing out on the savings, too.
Research the Next Step
Finally, if you feel like you've learned everything you can about your current financial stage, it can't hurt to research your next one.
When I was in the process of paying off debt, I knew my next goal would be saving for retirement. So I read a bit about investing and 401(k)s and how to set up a portfolio. I didn't understand a lot of it, because you learn a lot about investing when you actually start doing it, but I knew where to start when that time came. Researching the next step helped me learn, sure, but more importantly, it kept my eye on the prize.
Your next step might be tackling your impending student loan debt. It might be saving up for a home down payment. Whatever your goal, a little research will go a long way in helping you get started when you get there.
The plateau can be a boring, restless place. Take that as a good sign, though — you want to move forward with your finances. That's great! Still, it's easy to forget about the journey when it doesn't feel like you're climbing to the summit. If it seems like all you can do is wait, and you're itching to do more, these steps should keep you on track with your overall financial picture.