Why you Need Small Milestones

When it comes to a 52 Week Savings Challenge, Saving for a Car, your next Water Heater purchase, or, a new home, there is one thing that each of those actions has in common: they are all milestones.

Some milestones are easier than others – you can accomplish them in just a few weeks, perhaps even a few months. Some, however are longer — they might take up to 5 years if not longer to achieve.

And that length of time can get overwhelming for sure…after all, mapping out a plan to help you save 20% down on $30,000 for a home down payment is not something that may be too easy for most – right?

Small Milestones are Important

When you are looking at setting goals for saving, investing or even paying off debt, it’s important to ensure they are attainable.   Bite size more manageable milestones will give you quick victories and a positive outlook, and help you stick with your plan longer than not making small milestones and getting overwhelmed with the complexity of what you are looking at conquering.

Most important, think small – break down your goal into smaller, reachable moments. It’ll inspire you to continue even if you get discouraged looking at the bigger picture.   Thinking on a smaller level may actually encourage you to start, versus procrastinating (and costing you more long term).

52 Week Savings Challenge – where you save a little each week as you gradually work your way to larger amounts, over the course of 12 months saving a total of just around $1,400.

Saving a Summer Slush Fund for your children – starting in July, tuck away a weekly or monthly amount for an 11-month period (through June) to help you with a “fun” fund for their summer break. Use that fund for movie  food at the theaters, public pool admission, a new water slide for the backyard that you can power with a blower that attaches to your hose, or perhaps even a staycation in town.

Starting an investment. For some, this is a huge hurdle — once you open up that account, it’s incredibly easy from that point forward. Some banks will allow you to open an account with as low as $25, and a monthly draft.

Signing up for your 401K at work.  This is one of the best ways to save for retirement, but so few take advantage of the opportunity. It’s even more of a cost savings if your company provides a match.   Ask your Human Resources how you can sign up – and if your company does match, set up your 401K contribution to be what they match – over the next year your money will build up and after a year you will likely be amazed at how much your account has grown – and all it took was making a commitment to sign up.

Planning on having a baby soon?   Start a short term savings of $500 – $800 – over the course of your pregnancy, tuck away small amounts each week that’ll contribute to that $500 – $800 once the baby is born.  Once you give birth, open up a custodial account for your children in the form of a mutual fund and let that money grow. Contribute to it monthly.  Or open up a 529 plan for your child once they are born.

Reaching Milestones through Small Changes

Even the smallest changes will help you reach those milestones a little easier – everything adds up to BIG results over a period of time.

• Any behavior modification can be classified as a change…  here are some of the easiest ways to incorporate SMALL changes in your budget ~
• Canceling a magazine subscription you might be able to life without ($5 – $20 savings per year)
• Going to Starbucks once a week or, once a month and stuffing the difference of what you would have spent in your savings or IRA account
• Increasing your 401K allocation by 1% every quarter (or, semi-annually)
• Get a work bonus? Put 5-10% of it away into your retirement or, increase your contributions to your savings challenge
• Instead of going out to eat 2-3 times per week, make it once a month

The initial adjustment may, in most cases… be painless. They really will. But over time, those small changes will lead to the achievement of reachable milestones… instant gratification, and encouragement to push on and keep going.

The End Result

What’s in it for you at the end? Results – you will meet those milestones you have had as your goal for the last several months / years…     That might be $1,500 in your Emergency Fund that gave you the encouragement to keep going and save an additional 6 months of income for an emergency.

Starting that 401K may result in up to $8,000 in your retirement fund that first year (or, maybe even more…).  If anything, it means success – no matter how much or how little you have achieved.