My proudest moment as a father was when my 2 year old daughter, Ollie, started shouting "break it down" right before she would start to dance. This took months of coaching, and little did I know that her dancing mantra was the exact same technique that I have been using for years to help people tackle their budgets.
Do 10,000 pushups within one year. Go! Okay fine, don't. I know that seems like a tremendous number of times to push yourself up off of the ground. How about doing 28 pushups every day for an entire year? That seems more feasible, right? I know it's feasible. This is the fourth year in a row that I have done 28 pushups per day. By the end of this year I will have done over 40,000 pushups. I rarely think about the big numbers, 10,000 and 40,000, I only focus on 28 per day. And you should too.
Momentum is vitally important to financial progress. If you don't have momentum, then it's nearly impossible to make a significant change in your financial life. Big numbers can really ruin financial goals because big numbers don't emphasize the importance of small victories and momentum. Sure, you need to set a big number goal in order to accomplish big things, but your focus needs to point towards very small numbers over very small time frames. These small numbers will allow you to have several "wins". These wins create momentum.
Let's say that you have a dining out "problem", and you are trying to reduce the amount of money that you spend per month on dining out. Thinking of your big goal number throughout the month is not as effective as breaking the number down to the weekly level. Here's what I mean:
Last months dining spending: $360
Your goal for this month: $200
There are roughly 4 weeks in a month, therefore your weekly food budget is $50.
Trying to consider how you plan on cramming 93 dining out opportunities (3 meals per day for 31 days) per person into $200 seems overwhelming. But when you tell yourself that you just have $50 per week to spend on dining out, then the goal seems a bit easier. Were you able to keep your spending under $50 this week? Great, now you can spend a bit more next week. See?
Breaking goals down to a shorter time horizon is a very powerful practice. How powerful? Your mortgage company and your car loan holder think it's very powerful. Do you think your mortgage company would consider giving you one bill per year for $18,000? Or do you think that your employer should just give you one check for $60,000?
Do money and big goals intimidate you? That's okay. In the words of my 2 year old dancing fool, just "break it down!"