Habit Cultivation for Financial Goals: My Personal Experience

Two years ago, in October 2013, I learned about Dave Ramsey and read the information on his website as well as his book, The Total Money Makeover. My husband and I were inspired and blasted through the first two baby steps: saving $1000 in an emergency fund, and paying off all non-mortgage debt using the debt snowball. Doing those things was a huge relief, and we started working on baby step 3: fully funding our emergency fund with 3-6 months expenses.

And our pace slowed down. We had a few times we’ve had to use the emergency fund to cover various costs, and each time, it seemed like our motivation and intensity diminished.

This year, one of the goals I set at the beginning of 2015 was to “save $12,000 in the emergency fund.” I wanted to finish it off and be done with it.

And then we needed to replace our car. Our emergency fund was down to around $1200. So very discouraging. There was no way that we would finish it by the end of the year.

Don’t get me wrong: we were still in a better place than we were when we started. We haven’t put anything on a credit card in two years! But we were stagnant; we weren’t moving forward.

And then I realized that focusing on the end number might be what was killing our motivation –  similar to how focusing on a “goal weight” while dieting can make every day choices and changes seem to not matter. So I thought, “what if, instead of chasing the end goal of a certain number, I focused on cultivating the habit of the ACTION of saving?” So, as I had done with my other goals, I got rid of the goal of the “end number,” and set a goal to make a deposit at least 15 times of at least $10 by the end of the year (this was in September). Surely I could do at least that, right? It wasn’t nearly where we needed to be, but it was more than zero. So, I started by depositing $10.

And you know what? Over the next 6 weeks, it got easier! I’ve been depositing $20 or $30 some weeks! Seeing the balance go up again is encouraging. (And we got a few hundred for the car we would have junked, so that helped too).

It was definitely an epiphany that I could apply the same habit cultivation methods to savings habits that I was using with training and sleeping and eating habits. I am excited to see if this helps us get over the low motivation hump with this goal.  We’ve tried other money management methods before with similar results: high motivation in the beginning, and lower motivation later. I’m thinking that perhaps they all failed for us thus far because they required a complete overhaul of our habits overnight. Maybe if we had taken the time to develop one habit at a time, we might have had more sustainable success. Hey, just like health habits! Whoa!

Got any saving tips? I’d love to hear about them!