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4 Strategies to Reach Your Money Goals Faster

LearnVest
Thu Apr 24, 2014 02:53 EST

As someone who has studied positive psychology, I know that the first step in reaching new heights is setting a goal, and the hard part is sticking with your intention long enough to reach it.

With that in mind, I wanted to share four proven strategies to keep you on the path to wherever you're headed with your money. Consider these pointers on the psychology of money management.

1. Identify Your Motivation


What is it that you really, really want? To answer this honestly, it helps to know where your motivation comes from, explain Richard Ryan and Edward Deci, psychology professors at the University of Rochester. There are two types of motivation that govern human behavior: intrinsic motivation, which means being driven from within or doing something because we find it personally enjoyable, and extrinsic motivation, which involves being driven by something outside of ourselves or an external reward. An example of extrinsic motivation is studying to get a good grade, not for the sake of learning).

So, when it comes to managing your finances, the idea is not to think of it as a chore. Because if your motivation is extrinsic -- saving for the sake of saving -- then managing your money may always feel like a drag. But when you're intrinsically motivated, you're personally (pardon the pun) invested.

Start viewing money as a means to achieving your best life. Visualize what you're saving up for, whether it's the down payment on a house or an exotic vacation hiking in the rainforest (or both). Maybe even tack a picture of your goals on your bulletin board at work. Not only will you be working toward becoming more in control of your finances, you may feel more in control of your destiny.

2. Adjust Your Mindset


Henry Ford said it best: "Whether you think you can, or you think you can't -- you're right."

Translation: When it comes to staying motivated, mindset is everything.

In her book Mindset: The New Psychology of Success, author and Stanford University psychologist Carol Dweck describes the two types of mindsets. People with a "fixed mindset" usually believe that their intelligence, talents and other essential characteristics are unchangeable and pretty much as good as they're going to get.

Meanwhile, those with a "growth mindset" tend to believe that their talents and abilities can be continually developed through sheer tenacity and hard work. They don't view setbacks as doom and gloom but as learning opportunities. They're less likely to lapse into limiting beliefs about their abilities or ever see themselves as failures -- unlike those with a fixed mindset, who can constantly feel inadequate.

For example, a person with a fixed mindset might say, "Are you sure you can do it? Maybe you don't have what it takes, and you'll fail." Or the person may say, "You see, I told you it was a risk. Now you've gone and shown the world how limited you are."

The growth mindset, on the other hand, challenges those negative beliefs. Here are contrasts of the two:

Fixed mindset: "What if you fail? You'll be a failure."

Growth mindset: "Most successful people had failures along the way."

Fixed mindset: "If you don't try, you can protect yourself and keep your dignity."

Growth mindset: "If I don't try, I automatically fail. Where's the dignity in that?"

Breaking free from your fixed mindset means putting an end to all of that second-guessing, which, after all, only tends to lead to inaction. Next, let's find out how to work on taking bite-sized pieces out of your goals.

3. Work SMART


When it comes to setting goals, there are the good, helpful kind, and then there are the big, amorphous ones you're never going to accomplish. Which would you rather set?

Well, luckily there's an easy, five-step process to setting a goal that may make you more likely to achieve it. It's called S.M.A.R.T., and acronym stands for the following:
  • S = Specific: When you set your goal, clarify what you want to accomplish and how.
  • M = Measurable: Decide how to determine the extent to which each goal has been met.
  • A = Achievable: Evaluate all goals to make sure they're reasonable.
  • R = Relevant: Make sure this goal ladders up to your overall objective.
  • T = Time Frames: Set target dates, and times, in which to achieve different tasks.
So instead of saying, "I need to track my expenses better," a S.M.A.R.T. way of re-framing that goal would be, "I'm going to spend five minutes every morning recording my transactions in the LearnVest Money Center."

4. Buddy Up!


It's no fun to toil toward your money goals in isolation. First, it can be hard. Second, it may be lonely. Instead, consider combating the isolation (and having something to look forward to) by scheduling a weekly "coffee break" with a financial buddy who knows your goals and can help keep you on track. One who will tell you: "No, you don't really need to buy a new iPhone. You're trying to save up for grad school, remember?"

The amazing thing is that just the mere act of facing a goal with a friend by our side can make it more attainable: In a 2008 study, researchers took 34 students to the base of a steep hill and fitted each one with a weighted backpack. Everyone was asked to estimate the steepness of the hill. All those who stood with friends gave lower estimates of the hill's incline. And the longer these friends had known each other, the less steep the hill appeared -- proving that no matter how lofty your goal, sharing it with friends can make it seem like less of a climb.


Editor's note: This story by Stella Grizont originally appeared on LearnVest.

Read more from LearnVest:

5 Secrets to Better Life Habits

Dreaming Big: How 4 Real People Reached Their Ultimate Money Goals

The Right Way to Set Financial Goals
 
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