Budgeting, Debt, Personal Finance, Saving Money

The Daily Approach to Financial Improvement

I see many people who set big financial goals for themselves. Get out of debt. Save up six months worth of expenses. Pay cash for a car. Save up a twenty-percent down payment for a house. Some goals are even bigger than that. Save two million dollars for retirement. Pay cash for a house. All of these are noble goals and I applaud anyone willing to reach so high.

Unfortunately, I see a lot of these goals end in frustration. The goal is too big to be tackled in a short period of time so when months go by and there’s no sense of completion, many people get frustrated and give up. They get tired of living under restrictions or of putting so much time and energy into something that never seems to get anywhere. I can relate. I’ve set the same goals before and while it’s all worked out now, there were times where I wanted to throw up my hands and stop bothering with the whole thing.

There is one thing that my ups and downs taught me, though, and that’s that it’s much easier to think of personal finance goals as daily goals rather than as goals that will take months or years to achieve. Sure, you’re shooting for the big goal of getting the house paid off in three years, or of paying off $20,000 of consumer debt in a year. Obviously (unless you hit the lottery) you’re not going to accomplish these things next week. And it can get frustrating and tiresome to be constantly working toward something that seems so far off. It’s tempting to fall off the wagon. “Well, what does this $100 sweater matter, anyway? It’s not like $100 will make a difference tomorrow. We’ll still need eight months to pay off our debt,” is an example of what I hear people say when they get overwhelmed by a big financial goal. I encourage them to instead think in terms of today and not six months from now.

What does this mean in practice? It means that you forget the big number that you’re shooting for, or that you at least put it in the back of your mind. Don’t think, “Oh, I have to pay off $20,000.” If you want to pay off $20,000 in a year, break that down into daily amounts. Twenty-thousand dollars divided by 365 days in a year is roughly $50 per day (not counting interest, but let’s keep this simple). Change your thinking to, “I need to come up with $50 today.” It’s much easier to think about how that is possible than it is to think about $20,000.

It’s also much easier to do. You can brown bag your lunch and save $10. You can skip the coffee and vending machines and save $5. You can use coupons at the grocery store and knock $10 off the bill. You can sell a couple of DVD’s to a place like Secondspin.com and get $10. You can make the kids eat at home instead of stopping at McDonald’s on the way to soccer practice and save another $10. Refuse to buy the crap the neighbor kid is peddling for school and you’ve saved another $15, making your $50 for the day. If you have a spouse and he/she is saving too, your daily savings rate goes up.

Of course you won’t be able to make your daily goal every single day. But some days you’ll save significantly more, like the day you cancel the cable and save $100/month. That’s an extra $3.33 per day added to your daily total every month. If you have a big garage sale and make $200, that’s $6.67 per day for that month. If you have $100 from your paycheck direct deposited into a savings account, that’s $3.33 per day in seed money every month. Your good savings days will average out your lower days and if you have a daily numerical goal in mind each day, it’s far easier to keep focused.

To keep you on the good path, keep a piece of paper in the car or your purse and write down the savings as you go through the so you can see the daily tally. It provides inspiration to keep saving and cutting to make that goal. List the seed money you start out with each day from cancelled services, big sales, bonuses or “found money,” and automatic savings deposits and then add anything new you save that day. Chances are, at the end of the day you’ll have your total.

Even if your goal doesn’t involve dollars and cents, the daily approach can help. If you want to get your finances organized, plan for retirement, or simply learn more about money, think of what you can do daily to move the goal forward. If organization is your goal, one day you can research software packages. Another day you can go through your papers and keep/toss as appropriate. Another day you can go see a lawyer and get your will drawn up. If you want to learn more about money, one day you can go to the library and check out books. Each day you can read one chapter. And on it goes. It’s easier to succeed if you tell yourself, “Today I’ll learn one new thing,” or, “Today I install a software package,” than it is to say, “I’ll get organized and educated.”

Big goals are great to have, but they don’t lend themselves to success very often, at least not in a timeframe quick enough for most of us. Big goals tend to overwhelm and frustrate us making it likely that we’ll quit. Big goals are achievable, but you can make it easier on yourself by tricking your brain into thinking that the goal isn’t really that big.

8 thoughts on “The Daily Approach to Financial Improvement

  1. I really like the simplicity of this. It’s true that when you look at your goals they can seem out of reach but if you break it down it seems like nothing. It’s kind of similar to revision. When you look at how you have to learn all of a module it looks overwhelming but then if you break that into sections and have daily goals to reach it’s much more achievable.

    I think it really helps to have this mindset. It means you can spend less time worrying about this massive goal and more time on daily life goals. It also makes you more aware of what you’re needlessly throwing your money away on every day.

  2. I agree with your thoughts also. Sometimes your plans are delayed because of an unexpected expense. I plan with that thought in mind and mentally allow for more time to attain my goals. I look at month to month but sometimes I get bored. I might spend a few dollars that I haven’t planned but I’m back working the budget the next day.

  3. I agree in the sense that when the majority of individuals attempts to set goals for themselves they create a broad representation of what they feel their goal is. Goals should be specific and to the point so breaking down your yearly resolution into monthly, weekly, or better yet daily events can really make a different. This method of practice is also good to keep an individual on their toes and not just push their goal out of sight.

  4. This is a great idea. I’ve broken my savings and expenses down into monthly totals, but never thought about it on a daily basis. Most of my big expenses are fixed and can’t go any lower, so I find my budget busters are the little things. Stopping at QT for a pop most days, impulse buying a pair of cute flipflops or a tshirt, etc. This will really help me to know exactly how those little purchases are hurting my savings goals.

  5. I enjoyed reading your article. I agree with all what you have said. Persons always think about the lump sum not understanding that it is the small amount that makes it up. Patience also goes hand in hand with finances and one has to practice this as well. Everything in life takes sacrifices and once we are prepare to do this then the reward will be one that we are looking for.

  6. This is an interesting approach for people who manage their money more on a daily basis. I would think it would be especially good with those trying a cash only system.

  7. Oh yes, my husband and I have a very simple view. We have a caravan – it is 20 years old but in good condition. It cost us very little money to buy. We were away this last week and on the site was a large, new and very expensive caravan – it must have cost ten times what ours did – what did they get for the extra money? You tell me.

    We have a small sailing boat – it cost very little. We could have bought one for ten times the same money – but what extra would we have got?

    We have a modest television – we could have spent four times as much and got a huge plasma television – we woukld watch the same programmes.

    We could have spent an extra

  8. I’m disabled and so there aren’t a lot of ways to increase income, so I take great joy in each little way that I can save and reduce bills. We have some credit card bills we are trying to pay off. I try to pay a set amount each month as soon as the bill arrives, AND I pay it on line. I save the price of a stamp, and paying on line avoids the thoughts of late fees and the sooner principle is paid on the balance the less finance charges will be added. It may only be pennies each month, but as the price of stamps have gone up, each bill I pay automatically is saving money. Ten bills a month paid on line saves you $4.40 or close to $50 year. Switching to paperless IRA accounts saves us $50 a year. Paying my Medicare supplements automatically saves us $50 a year and the cost of the stamps (and the price of the checks) each month. Little things do add up.

    I love finding ways that as soon as it is set up, I never have to think of it again, other than making sure the money is in the checking account, and it keeps saving us money year after year.

    It is why you keep a running grocery list so that when you open or use the last of anything, it is put on the list so you remember to buy it on your next errand day rather than having to make an extra trip…it saves you money.

    The big thing is not to forget to put the savings into savings or against the credit cards, unless you are so broke those ‘savings’ are what is keeping your head above water. In that case the more you can save the easier your life becomes.

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