Tips for Setting Realistic Budget Goals and Incentives

Every year when we talk about setting goals – be it for reducing clutter, creating budgets or even crafting New Year’s goals, we’re struck with the same common mis-step that individuals seem to take over and over again. Both in our personal lives and in our work with Postconsumers, we see people setting goals that are lofty and “big” in scope. And then we see them become frustrated in the process of reaching these goals and, more often than not, abandon them. It’s fantastic to aim for the sky, but there’s also a reality of wanting to create goals that are achievable. The mental step that many people don’t realize or take is the understanding that you can still aim for your big goal while finding success in the smaller goals that make up the journey there. Today, we’re going to give you some tips for setting realistic budget and finance goals that you can actually achieve – and then resetting them to get to your bigger picture goal.

Why Are Smaller Goals So Essential to the Process?

If you’re in the process of setting goals for budgeting and finance, then you’re likely doing it because in the past you’ve struggled with this element of your life. There’s no need to wince at that statement. We all have areas of our lives that we want to improve on or where we’ve experienced frustration or even failure in the past. But nothing begets failure like past failures. It’s incredibly easy to say, “Well, I’ve never been good with money before, so it’s no surprise that I’m not succeeding now.” And when the feeling of failure sets in, you’re much more likely to just give up on your goals entirely. The truth is that setting budgeting goals isn’t that much different from setting dieting goals. You wouldn’t be able to healthily go from eating 5000 calories a day directly to 2000 calories a day, would you? So there’s no reason to expect yourself to go from being over-budget to saving aggressively each month. What’s important isn’t that you make a big change. It’s that you gradually make changes that will improve the overall happiness, satisfaction level and stability of your life. A feeling of accomplishment, not failure is essential to taking that journey. And setting realistic and smaller goals along the way is the tool with which you can achieve that.

The Starting Point: The Big Picture is Where You Start

We don’t mean to say that you shouldn’t take your overall “big goal” into account. In fact, it should absolutely be the starting point for where you begin creating targets. So what is your big goal? We certainly don’t think that you should start this process without knowing. Is it to save a certain dollar amount per month? Is it to simply spend a certain dollar amount less per month? Is it to reallocate how you’re spending money and what you’re spending it on? If so by how much and in what ways? Is it to eliminate debt or to just spend less than what you’re bringing in each month? All of these are goals we’ve heard and worked with before. They’re all valid. But they can all seem big and overwhelming at first. That doesn’t matter. What’s your overall goal? That’s what you need to know. And dream big. Because we can take as long as we want to get to the big goal. It can take years. What is important is that we know what the end game is.

The Next Step: It’s Time for a Little Project Management

Perhaps your strength isn’t project management, but you’ll need to employ a touch of it here. Any good goal is like any good project, it needs to be broken down into small and manageable tasks. In the case of a budgeting goal, that means breaking things down into smaller savings or spending steps to work your way up to your overall goal. Let’s use a savings goal as an example. Let’s say that your goal is to save $500 a month, but for most of us that’s a pretty lofty goal. Now, ask yourself how much you’re saving per month at the present time on average. Let’s say you’re doing a decent job of saving $100 a month. What are some reasonable increments to jump to? It may actually be a big jump to go from saving $100 a month to even $200 a month, so set a more reasonable goal of $150 per month. Then set a goal for every $50 you increase that by until you get to $500 a month.

But how long should that take? That’s a decision that is up to you. It may be relatively easy for you to get from saving $100 a month to saving $300 a month. However, that final $200 may be difficult. It’s okay though, because you only need to figure it out $50 at a time, and it can take as long as you want. The key is to be realistic. Set small incremental goals. Work towards them slowly. Celebrate your successes.

At Each Step, Identify Tools and Strategies

It’s not just about setting the goals though. It’s about accomplishing them. If that were easy, we wouldn’t be writing this article or dedicating an entire month to resolutions each year. Each time you “level up” from one goal to another, take some time to identify the tools and tactics you’ll use to accomplish that goal. Perhaps to go from saving $100 to $150 per month you simply need to replace your daily Starbucks run with coffee brewed at home. But it may get trickier to go from saving $200 per month to $250. You don’t want to go into your smaller goals blind. Take some time after you achieve a smaller goal to celebrate and enjoy the fact that you achieve it (the feeling of positivity is critical on your journey). Then dedicate time to figuring out what you’ll need to do to accomplish the next small goal. You need a plan, even if it’s a plan for an incremental goal.

The Number One Key: Be Honest

The most important aspect of setting realistic goals, however, is being honest with yourself and others. Is it actually a possibility that you can save $500 a month? It truly may not be, which means that nothing positive will come from setting something unattainable as a goal and you will end up feeling the impact of failure. Everybody can set goals that improve their lives. The successful people understand limits as well as aspirations. Be honest when you set your goals. Aim for achievable rather than completely aspirational. And then watch yourself succeed beyond what you anticipated being capable of.

Follow along with our January 2017 resolution of learning to control our budgets by spending less money on “stuff” and letting go of addictive consumerism on the social media channels below.

Photo Credit: duncan c via Flickr