For many of us, the start of a new year is synonymous with setting new goals, and while this is an important first step, achieving the goal requires more than simply writing it down on paper. Whether your goals are related to your personal finances, getting healthier, or pursuing your passion, there are simple things you can do to increase your chances of successfully achieving them.
1. Set SMART Goals
Often our goals can be somewhat vague – “make healthier choices,” “save more money,” “take more time for myself” – which makes achieving them somewhat difficult. By setting SMART goals, we set ourselves up for success. SMART goals are:
S-Specific
M-Measurable
A-Attainable
R-Relevant
T-Time-bound
Take the vague goal “Save more money” - how do we turn this into a SMART goal? Instead we could say:
“Increase my 401k contributions from 5% of my salary to 10% of my salary when I receive my raise in June.”
This goal is specific – increase 401k contributions to 10%. It is measurable – a certain percentage, and it’s attainable – by coordinating the change with a pay increase, the “felt” reduction in take-home pay will be much less significant. The goal is relevant – increasing 401k contributions increases tax deductions and puts you on the right track for retirement. It is also time-bound – it happens in June.
2. Automate It
In the example above, the other thing you’ve done to set yourself up for success is to automate your goal. Once you take the initial step of increasing your 401k contribution to 10%, it happens automatically. It comes out of your paycheck before you even get it, so you don’t even think about it.
The key is setting things up so you don’t have to think about them – there is no decision point. Having to make too many decisions in a day – am I going to exercise today, what am I going to wear, what am I going to eat, etc. – causes “decision fatigue.” This fatigue decreases your ability to make good choices (and helps explain why you were able to resist the 10 a.m. donut but find yourself with a bowl of ice cream at 9 p.m. after a long day of decision making.)
Anything that can be automated (think Steve Jobs’ “uniform” as a solution to the “what am I going to wear today” decision) frees up mental space and helps us make better choices.
How can you automate your goal? Perhaps your goal can’t be automated, but by automating other decisions you have to make every day, you can reduce “decision fatigue” and increase your ability to make the “good choices” that will ultimately help you achieve your goal.
3. Focus on Habit Change
One way to automate things is to incorporate them into your routine as a habit, a lifestyle change, rather than simply “grinning and bearing it” until you cross the goal off your list. Occasionally, “grinning and bearing it” makes it possible to cross a short-term goal off your list, and sometimes that’s okay, but to achieve more long-term goals, this strategy is not likely to work. We can only “grin and bear” something for so long before we’re likely to boomerang back into the bad habits that got us here in the first place. (yo-yo dieting, anyone?)
Many of us are under the impression that it takes just 21 days to form a new habit, but research points to much longer than that – closer to 66 days or more. So how do we make it easier to stick with something long enough to make it a habit?
One solution is what author S.J. Scott refers to as “habit stacking.” In his book, Habit Stacking: 97 Small Life Changes That Take Five Minutes or Less, Scott talks about leveraging our already well-established habits to develop new ones by “stacking” the new habits onto the old.
For example, if you want to start taking vitamins, you could couple it with the already well-established habit of brushing your teeth. Or, if you have a habit of buying coffee in the morning, but want to save more money, simply make a point of transferring $5 from your checking account into your savings account each morning when you pay for your coffee.
The other advantage here is that decision making is taken out of the process – you don’t ask yourself “Should I save $5 today?” it’s simply a given that when you buy a coffee, you transfer $5 to savings. These small changes everyday can add up to achieving big goals over time.
4. Reward Yourself Along the Way
The first thing you have to do with this step is to know yourself. What motivates you?
Maybe instead of transferring $5 to your savings account every time you buy a coffee, you decide to make coffee at home, transfer $5 to savings every morning when you push “brew,” and reward yourself with a coffee out every week for sticking to the habit.
Breaking down a larger goal into smaller components makes it easier to manage and gives you the opportunity to reward yourself as each part of the goal is achieved, thereby building and maintaining momentum toward the ultimate finish line.
If your goal is to build a $20,000 emergency fund this year, break that down into four $5,000 goals – one every three months. Each time you hit $5,000 saved, celebrate this achievement in a way that’s meaningful for you – indulging in reading a book all day, going out to dinner at that restaurant you’ve been wanting to try, do something that gives you joy. Instead of having a year-long daunting task, you now have four opportunities to cheer yourself on and enjoy reaching your goal.
Happy goal setting, and, remember, January 20th, December 14th, or any day in between, is just as good a day to set and achieve your goals as January 1st!
To learn more, schedule a complimentary consultation with Lauren E. Hawekotte, CFP®here.
