Maybe you can relate.
If you are saving for a down payment on a home, while maxing out your 401k contributions, and paying down debt -- you might find it difficult to gain traction on anything because your focus is spread in so many different directions. Instead of trying to do everything at once, it is far more beneficial to focus on one goal and really buckle down to see it through to completion.
But it’s not always easy. Staying focused on one financial goal at a time can be difficult -- often more difficult than we expect.
On the surface, it would seem easy to just choose one goal and attack it with laser-focused intensity, however our daily lives are full of distractions and our ability to devote our attention to one task is a lot easier said than done.
Thankfully, there are a few simple changes that can improve your concentration and guide you back on the path toward achieving your financial goals. Here are four tips to get you started.
Determine what needs to be addressed
In order to achieve your goals, you need to make them concrete. Start by making a list. Write down every financial goal that you have and be specific. Just saying "I want to pay off my debt" isn't good enough. You need to include detailed information like estimated costs and your ideal time frame. Here are some examples:
- Pay off my Visa credit card by June
- Save an extra $2000 in my emergency fund by December
- Set aside $3000 for a summer vacation cruise in 2018
- Purchase a $100,000 rental home by the lake in 10 years
Now, rank your list in order of importance. Note: this is not as easy as it sounds. Often, financial goals compete with one another. For example, it’s important that you save for retirement, but if you’re planning for a baby to make its arrival in a few months, that is another financial obligation that requires an equal amount of attention.
If you are struggling to prioritize between two important goals, consider the answers to these questions. Is this a “need” or a “want”? How does this goal impact my overall financial planning tower? Will one goal have more of a benefit than the other? Is there any additional harm in deferring one goal over the other?
Your answers should help determine the goal that requires your primary focus.
Get into the right frame of mind
One of the most difficult parts of maintaining concentration while working toward a single goal is getting into the right frame of mind. It’s common to struggle with new money habits, and you may experience setbacks along the way. Instead of getting demoralized about your progress and reverting back to old behaviors, just give yourself some grace and start over.
Suppose your goal is paying off the Visa by June, as above, but then you hit a pothole and cut your tire, so you have to replace the tire and the rim. If you have money in your emergency fund, this isn't an issue - that's what it is for. But, if you need to charge the repair to your Visa, then you just have to do it. You can make changes to your other spending to keep on track, or you may have to renegotiate your personal due date.
Don’t think of a temporary setback as permanent defeat. You didn't fail, you learned! Now get back on track, apply that lesson and make the changes needed to get further along than you did the first time around. What you’ll begin to notice is each attempt represents progress -- even if it takes you several attempts to reach your financial goal.
Keep the goal in front of you
In the book, The Millionaire Next Door, one of the key traits that the author found when conducting his research was that many millionaires have an innate ability to focus on a single goal. According to Dr. Stanley, non-millionaires focused on many things, never putting enough attention in any one thing to make it a success. The millionaires he interviewed maintained an intense focus on their one goal and worked towards making it a success.
In our society, we’re conditioned to expect instant gratification. It’s almost an anomaly if you come across someone with the financial discipline to defer immediate satisfaction in favor of reaching their long-term goals. For starters, money success takes time to achieve. Just digging yourself out of student loan debt could take several years. Then top that off with additional obligations like auto loans or mortgages that need to be paid. Remember: you don’t get into debt overnight, so you can’t get out of debt overnight either.
To keep you goal in focus, you can track your net worth, create a savings chart and fill it in each month, or put a sticky note on your mirror. Find something that will keep you motivated and keep your goal top of mind.
When looking at the path ahead of you, it’s easy to give in to frustration and impatience. But you shouldn’t! Instead, shift your focus to how different (better!) your life will be once this financial obstacle is no longer in your way.
Embrace the process
Change is a process that takes time to complete. If you have ever started a diet or workout program, you probably know what I mean. Many people are so fixated on the end goal that they become frustrated when comparing their current state to where they want to be.
This is a major cause of burnout and the reason that some find it difficult to remain on task toward achieving a single goal.
So, how do you overcome this problem?
You must change your perspective and begin embracing the process. Working toward your financial goals requires equal parts discipline and sacrifice. The work may feel restrictive or tedious, but that’s really just one way of looking at it.
Consider debt payoff, a home purchase, or retirement savings as a contest. Get a friend on board and make it a competition. If you shift your perspective slightly, you might begin to see things in a different light. After the recession, I noticed how it became very popular to use coupons, cook at home, and save money. This new mindset became a status symbol and came with bragging rights.
While it may not be exciting to stick to a budget and forgo certain luxuries in the short-term, just think about how thrilled you will be to pull into the driveway of your new home, or travel to that exotic locale, or maybe even retire early -- all because you changed your perspective and embraced the process.
Setting goals is a major part of personal finance, but it is merely the first step. Without the self-discipline to stay engaged and the focus to remain on task, your goals may "hop" away into the forest and disappear.
If you’re struggling to stay focused, try a few of the strategies above -- there’s sure to be one that helps. And if you would like an objective opinion, contact me to schedule an appointment.
Pamela J. Horack, CFP® of Pathfinder Planning LLC provides personal financial planning advice for a simple fee to young adults and working families in North and South Carolina through group classes, one-on-one planning, and ongoing advice.