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Four steps to simpler financial goals this year

So we’re now nine days into 2013. Just enough time for those New Year’s resolutions to have fallen by the wayside, right?

Or maybe you saw Tsh and Jeannett’s posts last week that encouraged you to think about goals for the year, rather than resolutions? If not, we’re going to look at that idea one more time, but with a focus on money.

Money is like fitness — it’s something that people often put off thinking about unless A) they’re about to go on vacation, B) they’ve had some sort of a scare, or C) it’s the new year.

If we harness that last one (yay, new year!) and wrap in Tsh’s point about goals-not-resolutions, we get a great four-point process to making 2013 a terrific year for you and your money. Let’s take a look at it.

1. Focus on only 2 or 3 financial goals for the year (keep it simple).

Don’t get bogged down with multiple elaborate plans.

Just like it’s easy to sit at your breakfast table and think, “I haven’t gone running in forever. Maybe I’ll run a marathon this summer!”, it’s easy to make elaborate plans about your money and everything you’ll get done this year. You’ll start budgeting, get out of debt, get that retirement account going, and maybe even set aside some money for the kids college. Whoa, buddy.

If you’re like most people (and the odds suggest you are), having too many goals will overwhelm you, and you won’t get any of them done. So I recommend that people getting started with setting financial goals just focus on doing one or two over the year. If you knock them out of the park in a few months, great. Add another one. But keep it focused at the beginning.

If you’re looking for ideas, the two best goals I can recommend are 1) to begin expense tracking / keeping a budget and 2) to look at Dave Ramsey’s “Baby Steps” and to get one or two steps further down the path than you currently are.

Each of us can only accomplish so many things. Don’t try to do too much, or you’ll get overwhelmed.

2. Break your goals into steps.

Little strokes, mighty oaks, all that.

The next way to keep from getting overwhelmed with your finances is to break your larger financial goals into absurdly tiny steps. I mean, embarrassingly small steps. “Why would I even need to write that down?”-small steps.

When I say “steps,” I don’t mean “Dave Ramsey’s Baby Steps” — I mean tiny, concrete actions you can take. These should be written down with verbs at the beginning of each line.

So if your plan is to set aside your $1,000 “starter emergency fund,” the steps should be as basic as:

  1. write down phone number of our bank
  2. call bank and ask to set up separate savings account
  3. note how much we have in main account
  4. figure out how much we can transfer over right now
  5. go online, to bank website
  6. set automatic monthly transfer of $100/month
  7. set reminder on family calendar to check account on October 1st

Each of those steps is pretty small. And, hopefully, not intimidating.

Regardless of what your goals are, break them up into the smallest steps you can think of. And don’t forget to start each step on your list with a verb.

3. Start today.

A glowing sunrise.
Photo by Stephen Bowler

Don’t make 2013 “the year you do ________.” Make today “the day you do _______.” Then do it again tomorrow.

Look at the small action steps you’ve broken your goal down into. If the first one is too big for you to do today, you haven’t broken it down enough. The goal isn’t to finish your entire goal today. It’s simply to move foward, in some small way, towards the finish line.

4. The perfect is the enemy of the good.

Topiary hedges in a garden
Photo by Neil Wilkie

If you try to make your finances “perfect,” you’ll get discouraged.

The perfect is the enemy of the good” is an old saying that simply means “it’s better to have a good system in place than to have no system in place because your standards were too high.”

One of the things I heard from a lot of new PearBudget users is how relieved they are that our introduction wizard says things like “just get started and you can fix this later,” and “making up numbers is okay.”

It’s tempting for all of us — especially with something we’ve put off for a long time — to want to get it just right. “After all,” we tell ourselves, “if doing it ‘sort-of-right’ was an option, wouldn’t I have done this by now?”

So, in order to do it “right,” we end up putting it off further and further, until our expectations are so high that we never even start. I fall into this trap all the time.

You know what? You won’t get it perfect. And that’s okay. Instead of staying where you are, you’ll move forward — and at the end of 2013, you’ll look back and feel the peace of having made real progress.

So what’s your one main money goal for the year? And, more important, what’s the one small action step you can do today to get closer to it?

Reading Time:

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  1. Jessica Howard (@quirkybookworm)

    This is probably sacrilege to you, but I started a account, and am so far loving having it track my budget for me. Much better than the antiquated and time consuming Excel method I was using. 🙂
    I love the tip to break down steps into teeny, tiny segments – and to start each item on the list with a verb! So helpful!

    • Charlie Park

      Ha! No, not sacrilege at all!

      I’m a big fan of people using whatever tools they find helpful in getting their finances under control. Here’s the way I see it: All the different financial apps and tools? We’re each a different general of the same army, all fighting against debt and overspending.

      So if you (Jessica) have found a tool that works well for you, that’s awesome.

      (And if you (other readers of this comment) haven’t found a tool that works well for you, I know a good one. 😉 )

  2. Savvy Aggarwal

    Love this post. Thanks Charlie for providing such a simplified perspective towards managing one’s finances. I have 2 financial goals for this year
    1) I want to save 50,00 INR as I will soon be moving out of my parent’s house into another city after my college is over at the beginning of 2014.
    2) I want to save 25,000 INR in an emergency fund which I will build upon later.
    I also like the part where you say that we should begin with small strokes aka actions which we should perform every day to be closer to our goals. Thanks once again. I will surely share this post on my blog too!

  3. Johanna

    This is great. Especially about doing today what needs to be done instead of seeing it as one big goal.
    We’ve always been big budgeters, but I find it is hard for me right now. Our goal is simply keep staying out of debt. We are living nearly completely off of savings and paying my husbands way through an MDiv in Seminary. Seeing that money be almost gone (he graduates in May) is stressful to me even though I know that is what we planned for. Next up? Figure out how to pay for his PhD….that IS stressful! 🙂
    Thanks, always, for your inspiration!

  4. Zipporah Bird

    Just paid off the last of my student loans in December and have snowballed in our land mortgage to be paid off in 13 months. Our house will be paid off in five years, hubby’s student loans one year later. Then, goodbye to debt forever!

  5. Victoria

    “Perfect is the Enemy of Good” why have I not heard that before? Love it and now want to remember it each and every time I think to myself, I don’t have time to do it the way I want to so why bother?

  6. Anne @ Modern Mrs Darcy

    We have a big financial goal for the New Year (Just ONE, Charlie!) and it’s a little daunting. These tips let me know we’re approaching it correctly. We’ve calculated how much we need to save to meet our goal month-by-month, we’ve plotted large and small steps to get there (like setting up a separate savings account AND packing lunches) and we know that even if we just get close, we’ll have accomplished a lot.
    Thanks for the encouragement this morning!

  7. Karen F

    great post – these are great tips for starting just about anything, aren’t they (a financial plan, an exercise plan, etc) – I often let the perfect get in the way of good, so I constantly need that reminder!

  8. Steph

    Our biggest financial goal for the year is to pay for childbirth upfront – no setting up payments with the hospital afterwards. We have insurance but a large deductible and then some coinsurance. We’re putting a set amount into our HSA every month and are well on our way to having all we’ll need.

  9. Pam@behealthybehappywellness

    I love number 3 – that’s great advice for ANYTHING, not just financial goals.

  10. Cathy Simon

    I’m super excited that this year’s big savings goal is to save up so we can get pregnant for our second child and have savings set aside for maternity leave when my paycheck gets cut in half!! I wanted to do this in 2012 but had to be patient in order to allow my hubby to drop from a full time job he hated to part time so he could start a part time small video business that he loves; and we also saved for a 3 month emergency fund in 2012 too. Now that we know that hubby’s small business is relatively stable and has reliable income, we’re back in baby business! 🙂

  11. Nina

    Sound advice! I’m big on personal finance and completely agree that keeping it simple and setting up doable action steps are key. I still have “big goal” lists like “save for a down payment” and such, but those hardly get looked at and simply provide me with a bigger picture of what I want, as well as giving me the order to do it. For instance, the first goal is to max out my emergency fund, then once that’s done, save for children’s college funds, etc.

  12. Sarah M

    We have been working towards financial goals for years. Sometimes big plans, sometimes small, but always working towards it (and it finally just feels like our life-style now, not a huge horrible thing we have to do), and this is really* good advice. I’m sharing this with facebook.
    Sarah M

  13. Alissa

    I needed this today! We sat down to finally “make a budget” for 2013 and got completely overwhelmed. We know we want to open up separate savings accounts for vacation, auto, house expenses, christmas, etc, but we keep getting paralyzed by thinking that we have to have every detail of our budget worked out before start putting money aside into savings – including assessing what we’re spending, where we can cut back, and planning for how we’re going to track and stick to our budget. Instead, we do nothing.

    Tonight, I’m going to change our FIRST GOAL to: Open savings accounts and set up monthly auto-deductions. If the amounts are’s right the first month, we can change ’em!

  14. Anna@The DIY Mom

    Such good advice to just start today with baby steps.

  15. Erica Rawson

    Brilliant! Thanks!

    I have 2 months of receipts to enter into pear budget and haven’t because of my perfectionism getting in the way. Thanks for the gentle nudge.

    Might I say just how awesome pear budget it!!!!

    • Erica Rawson

      Pear budget is I mean. Fat thumbs!

  16. Stephanie

    Great advice! Setting small goals is definitely the way to go!

  17. Ndidi

    Enjoyed your post. I very much agree with limiting your goals to just a few items so that it doesn’t become too overwhelming and to chunk those big goals into small realistic bites. What also works for me is to constantly review those goals daily so that I can keep it top of mind and know that I am working towards something. Thanks for the post.

  18. rebekah

    So helpful. Thank you.

  19. Traci

    I appreciate the part about perfection being an unrealistic goal. This is something I’m trying to keep in mind this year in every aspect of my life, but hadn’t really applied it to finances yet.

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