Thinking small

This year, think about thinking small.

Even if you don’t make resolutions, it’s hard not to imagine the stretch of a whole new year before you. with its blank pages and opportunities, and want to impose upon it some order, some purpose. But the truth is that a year is a long time - too long, really, if you’re looking to achieve something.

A particular action might lead to a particular result in a year. But without seeing the progress, it’s difficult to stick with the action. So, make the progress the goal. Don’t try to save $5,000 this year. Save $100 this week. After all, most of us don’t get paid once a year, so think of each pay cycle as a way to implement a micro-plan.

In his book The Opposite of Spoiled, Ron Lieber makes the case for giving kids an allowance unrelated to their household chore responsibilities. One of the reasons, he maintains, is that money management is a life skill just as important as learning to do those chores in the first place. Underpinning this is that the stakes are low: if a child makes a mistake with their $5 allowance (loses it, for example, or spends it on something it turns out they don’t like), they will remember that mistake, but it won’t really impact their long-term financial health.

The same concept can be applied more broadly to a budget. If you set micro-goals and miss the mark some weeks, you can quickly reset and get back on course. Or, you can quickly learn that the broader goal is perhaps unreasonable and rethink it. And you will get frequent boosts when you do reach your goals, so you’ll be more encouraged to keep going.

This is especially useful if you have irregular income, as so many of us do these days. It’s rare that we really know what shape our financial lives will take over a year, let alone decades. Smaller, quickly attained goals allow flexibility and the ability to build resilience into our bigger aims.