What’s the first thing you notice about these three numbers? If you’re like me, it’s the commas. You may have heard the phrase “grow some commas.” Essentially, it means to increase your net worth. More commas, higher net worth.
Want to grow some of your own? Whether your starter goal is to reach $1,000 or you’ve set your sights on $1,000,000, the same basic “COMMAS” rules apply.
No matter what you’re trying to accomplish in life—whether it’s to level up your finances or your basketball skills—you need a specific goal and plan of action. Without them, commas won’t come easy.
“If you don’t have clearly identified financial goals, how will you be able to measure your progress? How will you know you can even get there?” says Anna Sergunina, Certified Financial Planner at Main Street Financial Planning. “A goal without a plan is just a wish.”
One approach is to set SMART goals, which are specific, measurable, achievable, relevant and time bound. Take this example of a 35 year old, who wants to reach millionaire status by 65:
Specific: I want to retire at age 65 with $1 million banked.
Measurable: $1 million is a fixed value, so I’ll know when I get there.
Achievable: If I invest $1,000 every month over the next 30 years, I’ll reach $1,000,000, assuming an average annual return of 6.5 percent. I can carve out $1,000 to invest each month as soon as I pay off my last credit card and scale back some other expenses.
Relevant: According to my estimated expenses at age 65, $1 million will allow me live comfortably for another 30 years.
Time bound: I plan to reach this goal by 65, or 30 years from now.
Take stock of your finances and habits by asking yourself questions like: What’s my current net worth? How much am I saving now, and are there places to cut back in order to save more? When will I be completely debt-free?
Your answers should make your next steps obvious. For example, if your ultimate goal is to save $500 a month, and you’re only saving $200 now, your immediate goal is to figure out how to bump up your savings rate another $300.
If you haven’t already, create a budget and start tracking your spending. This can highlight certain places where you can cut back or reallocate dollars to your newly established goals.
Along the journey, periodically check in to see how you’re doing. If you’re successfully hitting your monthly goals and staying on track overall, congratulations! Take some time to celebrate any wins you already have under your belt. Paying off a credit card, not eating out as much or sticking to your savings plan are all victories in their own right and should be recognized. Whether it’s just a pat on the back or a small splurge, celebrating your accomplishments will ultimately motivate you to achieve even more.
Of course, it’s possible you’ll realize you haven’t been hitting your targets, and you’ll need to reassess your plan—perhaps pushing out your “done date” or aiming to save $10 more a week. If that’s the case, Brian Hanks, a Certified Financial Planner with Practice Financial Group, suggests sharing your progress and updated plans with a trusted accountability partner to help you stay on track.
Now, it’s time to supercharge your progress by bringing in more income. You can do this by finding more places to scale back, which creates more slack in your budget. But it’s a defensive strategy. To win the game, you need an offensive strategy, too. So in addition to being frugal and cost-conscious, look for ways to increase your cash flow, whether it’s through a salary bump, side hustle or investments that yield dividends or other regular income.
“Each and every one of us has unique abilities and skills for which we can be compensated,” Sergunina says. “Do you have a car? Become an Uber or Lyft driver. Do you have spare room in your home you can rent out through Airbnb? How about freelancing through writing or website development?”
For example, setting up an automatic transfer from checking to savings means you’ll never be tempted to spend the money you’ve earmarked for savings. Putting your bills on auto-pay means you’ll maintain a record of on-time payments and avoid late fees. And contributing money from your paycheck directly into your 401(k) allows you to invest pre-tax dollars without ever feeling the pain of moving it out of your checking account. “The whole system should be automated in a way that it’s actually harder to spend than it is to save,” Hanks says.
One thing you should never do when it comes to your financial goals is get complacent. “Leveling up your finances—and adding commas—will likely be a result of consistent, positive habits sustained over a long period of time,” says Jason Kirsch, Certified Financial Planner at Marcum Financial Services LLP in Chicago. “The dominant determinants of long-term financial success are not market returns but rather [your] behavior.”
Translation: After you hit milestones—say, paying off your Visa or saving $5,000—celebrate it, and then set a new goal. Maybe your next step will be tackling your student loans or saving $10,000. Or it can be a different one entirely, like paying for your upcoming wedding in cash or setting aside money for a down payment on your dream home.