Moving the needle on your financial journey can be extremely hard! You spend countless hours trying to budget better, save better, and reduce spending, only for the needle to go nowhere! It’s frustrating, and it’s infuriating to try so hard for what seems like nothing in return.
You post online asking for tips and tricks, but the problem with those is that they can be very unique to that person’s situation. In other words, what works for Betty might not work for you at all. It’s nice to get this information and maybe try it out, but a lot of the time those tips and tricks end up being a superficial solution that still doesn’t help you move your needle.
I want to introduce to you a concept that helped me to understand where I was tripping myself up, financially, and what you can do to help yourself move your financial needle towards your goals.
Say HELLO to your “Financial Comfort Point”
Your financial comfort point is a point on an invisible linear money scale where you feel the most comfortable. Now, I’m not talking about, “Hey! Everything is great here!” I’m talking about a point where you’re not doing great, but you’re not doing horrible either.
You’re just kinda okay. Like floating on an inner tube down an endless lazy river, just without the fun umbrella drinks. You’re okay, but you’re not HAPPY!
The problem with a financial comfort point is that it acts like a MAGNET that can either work for you or against you, depending on where you’re at on this linear money scale.
These points, once set, are hard to overcome!
For example, say you’re sitting comfortably on your financial comfort point and you get an unexpected bonus or pay raise and your financial comfort point shoots you to the right where you now enter your financial SURPLUS zone.
You have money! You’re excited! And you finally feel like you can breathe enough to…maybe…spend a little bit and not worry about the guilt of what this purchase might do to your budget because, HEY, you’ve got extra money coming in now.
Lifestyle creep brings you back to your comfort point
As your spending slowly starts to increase inch by inch (lifestyle creep), that magnet starts pulling you back to the center where your comfort point is. You don’t notice it at first, and maybe you don’t even mind, because, technically, you’re still on the surplus side, so, technically, your still above the comfort point which means everything is still A-Okay.
However, as you slowly start to slide back to the center you notice your financial comfort point is getting closer and closer until a little alarm goes off in your head yelling, “STOP!! You’re heading into DEBT territory!”
You step on the breaks and things come to a giant stop! Whew! That was a close one. You take off your spending hat, kick off your shoes, and sit back in your comfort point going, “Well, it was fun while it lasted.”
But what happens if you don’t step on the breaks in time? What happens on the DEFICIT side? Kind of the same thing, just not as fun.
That magnet will always bring you back to center
That comfort point magnet starts to pull you back towards the center because it knows you need to get out of debt! Though not as fun as spending your way back, you start to dig yourself out of that hole. You work hard, you spend less, you focus on keeping to your budget. And soon, all your hard work starts to pay off because you start to see the comfort point again. “YES!!! I made it!”
And just like before, an alarm starts to go off in your head that says, “Yes you did! Now, you can relax again. Release the stress. Chill!”
Before you know it, you put your shovel to the side, kick off your shoes, and sit back in your comfort point going, “Well, I did a pretty good job getting out of that situation!” And you begin to relax thinking all your effort is done.
Here we are, AGAIN, back at our financial comfort point
The magnet of our comfort point is STRONG! And it’s the main reason why we feel like we go absolutely NO WHERE in our financial journey. It’s the reason we feel frustrated because, no matter if there was a good financial event or bad, we find ourselves back at the same point…time and time again. So, how do we break this pattern and actually start improving our financial journey?
3 ways to get financially unstuck and moving in the right direction!
1) Start by evaluating your current expenses to see what’s dragging your money progress down.
- Get rid of any expenses that are NOT a “need” and you can live without.
- Expenses you earmark to “take a hike” can always be reintroduced at a later date, once your current situation is better.
- The money you just “freed up” can be put towards goals. See below…
2) Set clear goals, short and long term goals, and then give each goal its own financial goal.
- For example, you have a goal to avoid holiday credit card debt this year.
- Figure out how much you spend during the holidays (think of ALL the expenses).
- Divide that number up by the number of months you have from TODAY until the day you want the money ready by.
- Start earmarking that small goal amount each month in your Holiday Savings Bucket!
- When the holidays arrive, BAM! Your money is ready to go. No debt this year!
- You can do this same exercise for fun goals, financial goals, or for breaking up large bills into smaller amounts.
- Just create a savings bucket for each of those line items and start saving up a little at a time.
3) Move your financial needle even faster and get your money working for you by looking a HYSA (High Yield Savings Account).
- For example, you’ve created a savings bucket for each of your large annual bills, so you’re saving up a little each month for them.
- If those bills happen once a year, stick that money into a HYSA every month and let your “bill money” start making you “extra money.”
- Just remember to move the money back into your back account at least 1 week before your bill is due.
Savings Buckets create financial buffers to help keep your goals a priority, your spending in check, and your financial needle moving forwards! No more feeling DEFEATED!
So, stop settling for lounging at your financial comfort point and start moving your financial needle towards your goals and the life that you want. It starts with easy-to-handle-small savings steps that build upon each other to create a dynamic change in how you manage your finances.
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