Twelve Ways to Stay Financially Motivated

One of the most difficult aspects of getting your finances in order is finding the motivation to do so. Such a task can seem a massive endeavor to undertake. And even if you jump-start yourself into action, it can be daunting to maintain focus.

Here are some basic steps you can take to help motivate yourself to move from merely thinking about improving your finances to actually taking action to improve them.

1. Write a list. While this may seem obvious, it's often the hardest step to take. Thinking about all of the different tasks you need to do can paralyze you into doing nothing at all. If you can write down all of the things you need to do, then you have a list from which to begin tackling the tasks, and it will become easier to motivate yourself to work toward them.

2. Set financial goals. Once you have made your list of the financial tasks you need to accomplish, spend some time turning these into financial goals. One of the most important points when setting goals is to make them specific and to place a time limit on them. For example, "I want to have $25,000 in my retirement account within five years" is a much better goal than "I want to fund my retirement account." The more specific you can be with your goals, the easier it will be to take the steps needed to achieve them and to monitor and record your progress.

3. Create concrete and personal reasons. One of the most powerful forces that will help you achieve your goals is to have concrete and personal reasons why those goals are important to you. The more solid and exclusive the reasons you can list for each goal, the more motivated and dedicated you will be to achieving them. "I want to fulfill my dream to travel to Europe before I'm 65" is a more concrete and personal reason to want to save for retirement than "my financial adviser says it's important."

4. Create mini goals. Once you have your goals in place, take some time to break them down into smaller, mini goals. Many financial goals are long -term ones. They can often be so big and so far off in the future that when looking only at your desired final result, you'll have no idea where to even begin. By breaking down your goals into smaller ones, it will be much easier to visualize each step that you need to take.

For example, the goal of wanting $1 million in your retirement account could be broken down into something like "I will contribute 10% of my salary every month to my company's 401(k) plan to qualify for matching funds" or "I'll contribute $350 each month to fully fund my Roth IRA this year."

5. Keep a daily financial journal. A wonderful way to help yourself stay motivated and move toward your financial goals is to begin a daily financial journal. You can write this journal the old-fashioned way, by hand, or you can create one online and join the many personal finance bloggers who keep track of their finances for the world to see. Keeping a daily journal will help you stay focused on your money goals, offer a daily reminder of where you want your finances to be in the future and allow you to see your progress as you strive for those goals. When you get frustrated or discouraged, going back and reviewing the progress you have made will be invaluable to helping you stay motivated.

6. Don't keep it a secret and involve the entire family. While you may be tempted to keep your financial goals a secret, you will be much better off if you let others know what they are. It is much harder to back out or give up on your financial goals when you create a sort of personal accountability by announcing them to others. Letting others in on your goals also creates a support network that can help motivate and encourage you when times get hard.

For those with families, involving the entire household in your financial goals works in your interest. You will have a much better chance of completing your goals as a team than if you try to accomplish them entirely by yourself. The more people you involve, the more ideas you will have on how to reach those goals.

In addition, the undertaking could prove to be a financial learning experience for the entire family instead of just a one-person odyssey. If you fail to involve family members, they could inadvertently sabotage your efforts to reach your financial goals, and they may not understand why certain monetary sacrifices are being made. Taking the time to include everyone and seeking their help, advice and ideas will greatly increase your chances of success.

7. Keep your goals visible. Whatever your financial goals may be, make sure to place them prominently someplace in your house where you are sure to see them more than once a day. Many times people write down their goals and then file them away, never to be seen again. When this happens, the goals are usually forgotten in a short period of time. Placing your goals in a prominent area of your house will help ensure that they don't slip your mind. For example, you may want to place them on your refrigerator door, above your computer or on the backside of the door you use to exit your house. The more often you see them, the better chance you have of staying focused and motivated to reach your goals.

8. Chart your progress. Make sure that you take the time at least once a month to chart your progress toward your goals. If you are writing a daily journal, it should be easy to look over your entries and come up with a summary for the entire month. Charting your progress over a longer period will show you that the daily steps you take are adding up over time.

9. Join financial communities. A wide variety of Web sites cater to those who are trying to get their finances in order. Spending time in the forums, reading articles and sharing your own financial issues will help you gain valuable information on attaining your goals. These communities will also be a great help to keep you motivated when you're having trouble or when you're faced with unexpected financial setbacks.

10. Be patient. You need to remember that everything is not going to change overnight, and that it's going to take a long time at a steady pace to reach your financial goals. Many people give up when they believe that the changes they want aren't happening quickly enough. If you realize that doing a little bit every day will ultimately help you reach your goals, you will not be discouraged and quit when things don't change rapidly.

11. Reward yourself. Take the time to reward yourself as you reach milestones on your way to your financial goals. Giving yourself rewards is important to help keep you motivated and can help get you through some of the harder times. Your reward can be anything that helps motivate you to reach the goal. For example, a night out for ice cream, a pizza dinner or a trip to the movies -- anything that your family enjoys doing together to reward everyone for helping to make progress toward your goals.

12. Be prepared for setbacks. Understand that no matter how good you are and how well you have planned out everything, there will be times when unexpected setbacks occur. By understanding that these setbacks will come about, you can make sure that you have in place support mechanisms that will help you overcome these obstacles and stay on track toward your goals.

It is when these unexpected setbacks occur that being part of a financial community and writing your daily diary will really pay off. By understanding that these events will arise, you will be able to recognize them when they do and have a much better chance of not succumbing to the temptation to give up. By taking each of these steps into consideration, you increase the chances that you will have the focus to stay motivated and to reach all of your financial goals.
- July 18, 2007, TheStreet.com