How I Stay Motivated to Reach My Financial Goals

Last week I was responding to an invitation to do a guest post at Winning Personal Finance and one of the interview questions Jason sent me asked about how I stay motivated to accomplish a long-term financial goal.

The more I thought about my response the more I realized that this is a topic that merits additional exploration.

Here are the four tools/techniques I use to stay motivated as I work towards our long-term financial goals.

1. Visualizing Success

The first and most important thing I do is to update and print out hard copies of four charts that track the following on a monthly basis:

  1. net worth
  2. invested assets
  3. income vs. expenses
  4. cabin payoff progress

I then tape these charts to the mirror in our master bath where I will see them every single day.

The idea for doing the charts comes straight out of “Your Money or Your Life” and this process is foundational to everything else I do to keep myself motivated.

This is what my net worth chart looks like:

Super un-fancy yet effective net worth chart.

Printing out the charts every month and putting them in a place I will see them every day is important for two reasons:

  1. The charts are a daily reminder of exactly where I am in terms of my progress towards my goals.
  2. The charts remind me every day how far I’ve progressed from the very moment I started this journey.

The second reason has a bigger impact on motivation than the first.

Knowing exactly where I stand at the end of each month is great, but as I learned from reading Happy City, and wrote about in this post, humans are not great at assessing things in absolute terms.

We get used to where we are now and start thinking about where we might be next. We tend not to reflect on where we’ve been or to take stock of what we’ve accomplished.

The charts keep me motivated because they show my progress from day one of this journey. Every time I look at them, which could be several times a day, they are in the bathroom after all, I’m reminded of exactly where I started and exactly where I am today. Every time I glance at the charts what I see is our very real progress towards our goals. When you start feeling like you’re making real progress towards your goals you feel incredibly motivated to keep going.

I feel like all the effort we’re putting into this journey is literally paying off.  Frankly, it’s very exciting. Once you feel that momentum start to build it’s as if inertia takes over and it’s easier to continue towards your goals and more difficult to be thrown off course.

My son and me making progress up Wilburn Ridge.

2. I Have Long, Medium and Short Term Goals

Staying motivated to reach a long-term goal is tough, no question about it. No matter what long-term goal you’re trying to accomplish whether it’s losing weight, learning to play an instrument, learning a new language, or becoming a millionaire, for most of us these things aren’t going to happen overnight.

But if you want to accomplish any of these things you have to start the process. Whatever your goal you simply start from wherever you are. You don’t have to go all the way from your starting point to your end goal with no stops in between. You build in milestones, or check points along the way. In other words you map out your short and medium-term goals to mark your progress towards your long-term goals.

Long Term Goals

My long term goals are to pay off our cabin in 5 years or less and to accumulate at least $1 million in invested assets over the next 7 to 8 years or less. Once we reach $1 million or more in invested assets we should be ready to declare ourselves financially independent and be comfortable living on a budget of $40,000 or less in annual non-mortgage expenses.

Medium-Term Goals

To support these long-term goals I have medium-term goals. My medium term goal with the cabin payoff is to pay down the original balance by at least 20% a year until it’s paid off. We started on the cabin payoff goal in February of 2017 and after ten months we’ve brought the initial balance down by more than 22%, so we’re on track to hit our year-1 goal.

Our medium-term goal for reaching financial independence is to prove to ourselves along the way that we can live comfortably on an annual non-mortgage budget of $40,000 or less. After the first year of our journey we were very close to that mark, which builds our confidence and reinforces that feeling that we’re making real progress. Progress begets more progress. 

Short-Term Goals

Our short-term goals are to hit monthly targets that support our medium and long-term goals.

At the end of every month I transfer any amount above $1,000 from our checking account to the cabin mortgage.  So our short-term goal is to be able to apply additional principal to the cabin mortgage every month.

In order to hit our medium-term goal of $40,000 in annual non-mortgage spending we have a short-term goal for non-mortgage spending of $3,333 per month or less. Our short-term non-mortgage spending goal also supports our cabin payoff goal. The less we spend on non-mortgage expenses the more we have to apply to the cabin mortgage.

Measuring progress towards all these goals – long, medium, and short – all ties back in with updating our spreadsheets and printing out new charts at the end of every month.

3. Forming a Habit Loop

Earlier this year I read The Power of Habit by Charles Duhigg, which looks at habits as behavior sequences with three essential components. The book suggests that once we understand the components of habitual behavior we can then modify the components to our benefit. We can eliminate or reverse bad habits and we can instill good habits that help us transform our lives and reach our goals.

The three components of habit are:

  1. Cue
  2. Routine
  3. Reward

And they work in a simple loop like this:

The Habit Loop

The loop starts with the cue, which is some sort of trigger for action. Then comes the routine, which is some type of mental or physical behavior. A reward follows the routine and if the reward is strong enough it can produce a craving which cements the habit.

Without actually knowing I was doing it at the time I created a habit loop around paying off the cabin mortgage.

It works like this:

My Cue is that the month is coming to an end and I’ll need to make new charts soon, which triggers my Routine of applying excess checking account funds to the cabin mortgage and producing a new cabin payoff chart.  My Reward is that I get to print out and tape up a new chart that shows new progress. I like this new progress. It makes me feel good. I like to feel good.

Cue, Routine, Reward, Cue, Routine, RewardCue, Routine, Reward.

See how it all goes back to doing the charts? It’s addicting.

Homegrown broccoli. Now available in habit-forming varieties.

4. Maintaining Equilibrium

As I’ve touched on in other posts here and here, owning the cabin and figuring out how it fits in with our journey to FI has at times been a real puzzler. Admittedly, I’m the sort who can be prone to swings between one extreme and the other – especially when I’m struggling with a major decision.

And so it has been with the cabin. At times I look at how much it’s costing us not only in terms of mortgage payments but in maintenance, utilities, and in owning a third car to leave at the cabin and I think, “we have got to sell this thing! We’d reach FI so much faster if we didn’t have this huge drain on our income.”

Then at other times I think about how much fun we’ve had at the cabin and all the opportunities it has afforded me to pursue two of my favorite activities – fly fishing and playing bluegrass music.  Not to mention all the memories we’ve made as a family enjoying the outdoors – hiking, tubing, kayaking, mountain biking, and more. And then I think, “we have got to figure out how to move here full time!”

Moving back and forth between these two extremes and not knowing how to solve this conundrum can get me down, and when I get down about something I find that I’m much more prone to straying off course and losing momentum towards our goals.

Keeping it Between the Lines

Fortunately there is something that centers me and helps me keep it between the lines whenever I’m experiencing these pendulum swings. That something is simply having the goal of paying off the cabin.

Whenever I find myself riding out too far towards one extreme or the other I remind myself of the goal and that helps me stay balanced.

Drifting out towards the extremes is a waste of mental and emotional energy because it invites my mind to dwell on the “what ifs”.  What if this happens, what if that happens, what if I decide on this vs. that, blah, blah, blah.  Not productive.

Returning my focus and energy to the goal provides me equilibrium and makes me realize that I don’t have to make a decision right now. What I need to do now is continue towards the goal. Once the cabin is paid off we will have greater financial flexibility and more options. We can reassess our goals at that point and be intentional about our decision making instead of reacting to swings from one extreme to the other.

It’s Working for Me

And there you have it, the four things that keep me motivated to keep on keepin’ on towards our long-term goals. So far I’m amazed at how well these methods are working for me. I think something they all have in common is that they help me realize that we’re making real progress, and I sincerely believe that progress begets progress.

Two questions before I sign off:

1. How can these techniques be adapted to fit your situation and help you stay motivated to reach your long-term goals?

2. What other tools and techniques are you using to keep your motivation level high? Let me know as I might need to borrow from you along the way.



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