Don’t Set Money Goals Without Habits – And Vice Versa

It’s that time of year, friends.

Resolution time.

It’s like Hammer Time, but more intimidating in almost every way, unless you are literally on a dance floor right now. Even then, does anyone really expect dance perfection when Hammer Time comes on?

I didn’t think so.

I’ve always loved resolution time, because I love the feeling of starting fresh. Whether it’s a new Moleskine notebook or a new year, there’s something about a blank slate that is unbelievably appealing to me. Based on the number of people I saw posting about their resolutions on Facebook yesterday, I’m not alone.

But here’s the thing.

To reach a set money goal, you can’t just rely on the goal. You need to establish habits to go along with it.

I’ve been deep into thinking about habits lately, ever since finishing Better than Before, by Gretchen Rubin, and I realized how many of my financial – and other – goals hinge on good habits.

With good habits, achieving my goals is – well, not easy easy, but definitely easier.

Without them? Well, the goal looks really good on a piece of paper sitting beside my desk, but that’s about it.

Even though I’m thinking so much about habits lately, I know all too well that a habit without a goal – especially a habit you’re trying to start – can quickly become a huge source of stress.

Let’s take “saving more money.”

It’s a money goal I’ve heard a lot of people mention in the past few days, and it’s a great thing to work towards.

Yeah, no surprises there, I’m a fan of saving more money.

It’s also one I’ve tackled both ways – with a goal but no habits, and with habits but no goals.

Spoiler alert – neither of them went they way I wanted them to.

Setting Money Goals Without Habits

When I was in university, I wanted to “be good with money.”

Let me just say, that’s not even a good goal. It is literally none of the things that make a goal SMART – it’s not specific, measurable, or time bound. Because my goal was none of those things, there’s no way of knowing if it was achievable or realistic, either.

PS. Never heard about SMART goals? Here’s a primer on setting SMART goals as it applies to personal finance, from the Simple Dollar.

That said, I still had it in the back of my mind.

I wanted to be good with money, and knew I should be saving money, but I never did in any meaningful way.

It’s not that I didn’t have money to save either, which is the worst part. I was lucky enough to secure some pretty great scholarships, I had a lot of family support, and I worked part-time throughout my entire degree. I was never a starving student, which like, thanks mom and scholarship organizations. That was so nice.

But all that money I made working? And by keeping my grades up?

I never thought anything of buying $5 lattes and food court lunches while at my part-time job, or taking advantage of the very generous discounts I got on clothing. I thought nothing of paying $15 to park at the mall each and every shift I worked.

Those were the habits that I let form, instead of taking the time to build habits that would actually help me “be better with money,” like tracking my spending or setting up automatic savings contributions.

Building Money Habits Without Goals

Then I graduated from university, and made a totally unconscious decision to take the exact opposite approach.

I went straight to the bank, opened up a TFSA, RRSP and my now-infamous “short term savings account.” I also set up automatic contributions to each of those accounts, so that 10% of my after-tax income went directly into each one.

“But Desirae,” you’re probably thinking, “that sounds like exactly what my parents are always telling me to do.”


Except for one thing.

I was miserable about it.

I mean, ok, yes, it worked out really well, and I am in no way suggesting I regret doing any of those things. But I had gone through the motions and built the habits everyone told me I should have in order to be on top of my finances, without ever trying to set money goals for my future.

I never calculated what I actually needed to be saving for retirement.

I never calculated a goal for my emergency fund.

I didn’t have a house purchase on my radar anytime soon.

I didn’t have a timeline – or budget – for when or how I wanted to get a dog (which let’s be serious, is so up there on my personal goals list and always has been.)

I just knew I should do these things, so I did. But it turns out that saving 30% of my take-home income at that point in my life was majorly stressful.

Anytime I would think about big purchases or future plans, I felt like an elephant was sitting on my chest because I never thought I’d be able to afford any of them – because I had never linked my admittedly recommended financial habits to set money goals of any kind.

When you put the two together? Magic.

Had I actually set some money goals for those savings contributions, I could have focused on what my efforts were going to get me. A secure retirement someday? A freeloader roommate rescue dog? Enough of a savings cushion to not freak out when I was (inevitably) in between jobs?

That would have been infinitely preferable, and honestly, would be pretty in line with my current strategy of focusing on both my goals and my habits.

I have some big financial goals right now – said every person in their 20s, ever. I know I’m not alone on that. I’ve got savings goals for my emergency fund, my dog’s emergency fund (I knowwww I’m totally that person) a house downpayment, retirement and vacations.

If you’re keeping track, that’s two more things than I was saving for in my totally-stressed-out-about-money phase.

But I have measurable, concrete goals for each, and I’ve really prioritized each of those goals, even against each other. For example, my monthly vacation savings is about 1/3 of my monthly house downpayment savings – because owning a home is way further up on my priorities list than travel.

So, knowing that I want to achieve all of these things, I’m also focusing on building the habits that will help me get there.

I’m increasing my savings rate, setting up separate accounts for each goal, being more frugal with books, cooking, coffee and other monthly expenses, and tracking my spending to make sure I’m on track.

That’s a far cry from my admittedly spend university days.

And you know what? I’ve had more success meeting my financial goals this year than I ever have in years past.

That’s the power of combining goals and habits.

What financial goals have you set for yourself for this year – and have you thought about which habits might help or hurt them? I’d love to hear what you’re working on in the comments!