One of the biggest challenges faced by many consumers is that they don't know how to form good money habits that stick. It's depressingly easy to get caught in a personal finance boom and bust cycle in which you live spare for a few months to pay off debt, and then, once the scarcity is over, you return to your old spending ways.
Getting stuck in this cycle can be frustrating, and hold you back from what you hope to accomplish with your money. Instead, it makes more sense to form good money habits that will stick in the long-term. It might mean taking a little longer to see your results, but it could also get you off the personal finance roller coaster.
Decide What You Want Your Money To Accomplish
Start looking at your money as a tool that can help you accomplish your lifestyle goals. Whether it's a shorter-term goal, like paying down debt, or a longer-term goal, like retirement, view your money as a means to an end. Figure out what you want your life to look like, and determine how your money can make it happen.
Once you see your money as a resource, it's much easier to see purpose behind your money. Prioritize your goals and lifestyle preferences, and it will be easier to use your money for the things that matter most.
Focus On One Thing At A Time
Next, focus on one issue at a time. This means that you start with one area that is most important to you and get that squared away. It doesn't mean that you have to completely accomplish your end game before moving on, but it does mean you have to get comfortable and make something a habit before moving on.
Start Small, And Make It Manageable
When focusing on one thing at a time, it helps to break things down. Instead of saying that you want to pay off your $10,000 in credit card debt, say that you want to put an extra $300 a month toward debt pay down. This is a manageable goal. Start out by freeing up (but cutting expenses or earning more money) $50 a month, and then add to that. Work toward your $300 a month goal. When you reach that goal, and putting $300 extra toward your debt each month has become a comfortable part of your spending plan, you can move on to something else.
While you continue to put money toward your debt, you can start working on some other important goal, such as retirement savings or college savings. Start small with those goals, and step up as well. That way, you move in increments that you can manage, and that you can maintain for the long haul. What's great about this method is that you can shift the amount to another goal once something is achieved. So, after you pay off your debt, you can take that $300 you were paying each month and add it to your retirement fund.
In the end, it's about making sure your money practices are sustainable. As long as you make sustainable changes, you should be able to stick to your better money habits indefinitely.