Last post we discussed setting goals and how that impacts the success of your budget. It’s obviously important to know what you’re aiming towards so that you can set yourself up for success. But what happens when we don’t succeed?
Every time I try to eat healthy, I will typically make it a week, maybe 10 days before crashing and either buying a bunch of Zebra Cakes or going to get fast food. It’s not that I’m not serious about my goals, and it’s also not that I made them too unreasonable. In fact, for the most part, they’re very realistic goals and certainly achievable, but I still fail. Why do we fail with our goals, even when they’re reasonable?
It turns out, changing your habits is hard. Studies have shown that it takes anywhere from 18 to 254 days to form a habit. The rule of thumb is that it takes 66 days to form a habit, though (which goes against the oft quoted number of 21 days). That’s roughly two months.
That means it takes two months of forcing yourself to go against your predispositions before it becomes natural to do something. Can you imagine if you decided to force yourself to only use your left hand (or right hand for all of you left-handed folks) for two whole months? Not only would it be pretty agonizing, it would be incredibly difficult to remember to use only your non-dominant hand all the time for that period of time.
The problem with our goals is our habits. When you establish a goal, the key to achieving it is overcoming your habits and predispositions, because humans are creatures of momentum. This is equally true for your budget and financial planning.
If you want to find success with a savings or budgeting goal, or any other financial goal, you need to sustain momentum to overcome your habits. And the key to that momentum is realizing that you’re going to fail.
This may seem counter-intuitive, but you should accept failure as a part of your goal-setting process. Failure is a part of life, and let’s be honest, it’s going to be a part of your budget as well. When you create a spending and savings goal for your family, you have to realize that you won’t be perfect with it. You’ll blow out a tire on the way to work and have to spend an extra $100 to replace it, or you daughter will break her arm playing lacrosse and you’ll have to pay the hospital bills. Or, you’ll get lazy and splurge on KFC for a week, which is doubly costly because all those vegetables you bought at the beginning of the week went to waste and molded.
Face it up front. You’re going to fail with your budget at some point. But that’s okay. Perfection is not the goal, success is – and in this case that means long term success, not perfectly sticking to your budget for March. The important thing to remember is momentum. Your goal should be to maintain momentum towards your goals even when you fail at them. This means picking up and getting back on track afterwards without spiraling.
Unfortunately, this is one of the main problems with budgets, goals, and resolutions. When people miss a week at the gym near the end of January because they have a big deadline at work, they feel like a failure and decide that it’s not worth it to go the following week. Eventually, they’ve given up, and the gym is getting a bunch of free income. How do we maintain momentum with our budget? Here are 4 ways to persevere in the face of adversity.
- Build failure into your budget – this is probably my favorite from a psychological perspective. My family calls them “cheat days”. We budget for a night or so weekly where we don’t feel like cooking and some extra miscellaneous funds in case there’s an emergency. If there’s no emergency or if you do well enough not to need it, that’s even better! But this piece is in your budget to allow you to breathe. Remember, you’re expending a lot of energy to change your habits, and they’re not going to want to disappear immediately. Give yourself some time to get over the hump by budgeting in a bit extra for failure.
- Establish an emergency fund – It’s hard to pin down an exact number but studies have shown that at least 1/3 of all Americans live paycheck to paycheck, and many families have no significant savings in place for emergencies. I can’t stress this enough, and I guarantee that most financial experts would agree with this, establish a small emergency fund. Even if you’re trying to pay down high interest rate loans or credit cards, the first thing you should do on your financial journey is establish a small emergency savings fund. When you’re paying off credit cards and you blow out a tire on the highway with no savings, how do you pay for that tire? With your credit card, which just returns you to the vicious cycle of debt and interest. Having an emergency fund of just $500 has been shown to make a substantial difference in terms of meeting your financial goals. This way, you can have a surprise or emergency and not break your budget.
- Make more money – This one may seem like a stretch for some people, but it’s one of the main points I’m making with this entire blog. Never rely strictly on your employment income. Whether it’s $5 a week or $500, extra cash will be significantly helpful. For people struggling to set a budget or get themselves straight financially, setting up an Airbnb may be out of the realm of possibility. But driving for Uber, delivering groceries with Instacart, or just doing surveys on Swagbucks or transcribing medical records online can give you some extra cash to help towards your bills and towards those days when you can’t stick to your budget as well.
- Get creative – For the more seasoned professional at budgetary momentum, you can start to shake things up. If you’re getting to the point where you feel like you may be able to survive without stopping by Starbucks every morning, you can start to change things up to maintain the same activities while spending less money doing them. For instance, a milk frother is a cheap product you can find in almost any store, so you can make yourself lattes and cappuccinos at home without breaking the bank at Starbucks. Instead of using your cheat night to grab food from KFC, maybe all the cooking you’ve done this week has created leftovers or freezer meals. You won’t have to cook, and you still won’t be spending additional money.
There are lots of things you can do to shake up your budget and try to get creative. In the end, the goal is about maintaining momentum towards success. You will fail, we all do. Look at that failure as a momentary lapse, not a portent of things to come. Accept it and move on. Your budget will thank you for taking steps to avoid further spiraling.