How to Motivate Yourself to Watch Your Finances

How to Motivate Yourself to Watch Your Finances

Financial planning can be very difficult, not just because it is difficult to deny yourself any luxuries you may have become accustomed to (my luxury, as you know, is a grande sugar-free vanilla half-fat latte) but because it can be really boring to watch your finances.  So how can you motivate yourself to keep an eye on your money and make necessary changes in your financial planning?  To begin, you can start by making an ideal financial plan that it's possible to stick with. 

Create A Financial Plan With Some Wiggle Room

When you set up your financial plan, look at where your money has gone in the last few months.  Add it all up, and see if you are roughly set in a 30% housing, 25% taxes, 4% insurance, 15% savings and 26% miscellaneous monthly expense mindset.  If you are not even close, identify the areas that may need help.  For example, if you are spending 56% of your funds on miscellaneous items because you do not have housing expenses yet, you can easily identify miscellaneous spending areas in which you can pare back so you can start saving for the first home of your dreams. 

Once you have identified where your money is going, you can change your habits for the better.  The most common mistake made in personal finances is spending too much on miscellaneous items and saving too little.  Identify some items you consistently spend too much on, and pare those items back. 

So, if like me, you spend $5 per day on a latte, pare that back a bit.  Instead, buy one coffee per week, and put the extra $20 per week into savings. The important part of maintaining a finance watch is to allow yourself some room to splurge.  A cold-turkey approach to financial planning is a failure waiting to happen. 

Forgive Yourself

If you slip up and spend too much, don’t worry about it.  If possible, return items that you could not afford to buy.  Otherwise, move on, and learn from your mistakes.  If you need to adjust your ideal spending to include a few luxuries while paring back on others, make the changes.  A flexible financial plan will be more beneficial than no plan at all, and eventually you will become accustomed to a routine that will not include some of the luxuries you thought were necessary before. 

Find Accountability

One helpful trick for any difficult change is to find an accountability partner -- someone who can help you stick to your guns when things get tough. Maybe this is your spouse, a good friend, or a member of your family. Whoever it is, make sure that you trust them, and that they're willing to "be the bad guy" if you start losing your motivation.

Treat Yourself and Celebrate

You can treat yourself to occasional splurges, but you can also treat yourself to free items when you reach small financial goals.  Take time for yourself, a luxury in itself, by going for a walk, reading a book, or watching a movie.  When you reach large financial goals, like saving the down-payment for a house, the goal itself will be a treat.

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MoneyCone's picture

MoneyCone wrote:

Tue, 12/28/2010 - 14:01 Comment #: 1

Take small steps and track your progress - much easier to *stay* motivated!

retirebyforty's picture

retirebyforty wrote:

Tue, 12/28/2010 - 17:55 Comment #: 2

I love watching my finances this year, 2008 and 2009 not so much. :)
I'm forgiving myself and starting the budget over for the new year. We did pretty well for the most part, but still need to cut expense. No more electronic gadgets for me!

Jeff @ Sustainable Life Blog's picture

Jeff @ Sustainable Life Blog wrote:

Tue, 12/28/2010 - 20:29 Comment #: 3

THese are some great tips. I think that finding accountability is probably the most important. If you dont care about your finances, who will. I also think that it's important to forgive yourself. You arent born with knowledge to manage your finances, someone has to teach you and even more important, you have to pull your fingers out of your ears when they are trying. If you dont want to take advice from someone you're going to end up learning the hard (read: expensive) way.
If you choose to do it this way (or do it by accident) you cant beat yourself up over it, you just tell yourself not to make that mistake again and move on to the next thing.

Also, I didnt know you were in Hays - I've been to the brewery there. It was awesome!

Jessica Schmeidler's picture

Jessica Schmeidler wrote:

Tue, 12/28/2010 - 20:42 Comment #: 4

Jeff, are you talking about Gella's?

Christa Palm's picture

Christa Palm wrote:

Wed, 12/29/2010 - 15:32 Comment #: 5

MoneyCone -- great motivation tip!

Retirebyforty, isn't it rough to give up the electronic gadgets? I have a new rule -- no more new cell phones :(

Jeff, about accountability, your exactly right -- no one is going to care about your finances except you and your spouse. And forgiving financial mistakes can be difficult, but I agree that if you think of a mistake as a learning experience, it's easier to pick up and move on.

Jeff @ Sustainable Life Blog's picture

Jeff @ Sustainable Life Blog wrote:

Wed, 12/29/2010 - 21:14 Comment #: 6

I thought it was called liquid bread, but yes, that's what I'm talking about!

Aloysa's picture

Aloysa wrote:

Wed, 12/29/2010 - 22:21 Comment #: 7

I don't need any motivation. I am obsessed. I am a control freak when it comes to finances (look who is talking a spender and and a shopaholic). LOL

Christa Palm's picture

Christa Palm wrote:

Wed, 12/29/2010 - 23:14 Comment #: 8

Congrats on your internal motivation, Aloysa! I wish I could say the same for myself...

Black Coffee: My Spidey Sense Tells Me There’s Som's picture

Black Coffee: My Spidey Sense Tells Me There’s Som wrote:

Sat, 03/19/2011 - 19:25 Comment #: 9

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