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We’re only a few weeks into 2024, which means that hopefully, a lot of people are still making plans to uphold their financial resolutions. Recent research from The Ascent found that building an emergency fund was one big goal Americans were aspiring to in 2024. But the idea of doing so can be pretty daunting.
See, if your goal is to save up a fully loaded emergency fund, you’ll need enough money to, at a minimum, pay for three full months of essential bills. Even if your expenses are on the lower side, that may be a tall order.
Let’s say you’re starting with a $0 balance in your savings account, and your typical essential spending amounts to $2,000 a month. That still means you need a whopping $6,000 to be covered for emergencies on a basic level. And going from no savings to $6,000 worth isn’t exactly a piece of cake.
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That’s why it’s important to approach a goal like this realistically. Rather than focus on a total goal or yearly goal, you may be better off breaking your savings goal down into a weekly one.
Slow and steady sets the stage for success
In the aforementioned research study, almost 30% of respondents were not confident in their ability to keep their New Year’s resolutions. And part of that might boil down to their approach.
Setting a really large financial goal (whether it’s to build an emergency fund or something else) can be overwhelming. And that’s why a week-by-week approach may be better.
Let’s imagine you want to save $6,000 in 2024. That’s a lot of money. But instead of fixating on a number as large as $6,000, you might feel better working toward $115. That’s the weekly sum you need to sock away to amass $6,000 in a year. And that’s a much less scary number.
You might manage to save an extra $115 a week by cutting a few expenses, like skipping takeout meals and brown-bagging your lunch daily instead of buying it at an eatery close to your office. Or you might manage to save $115 a week by working a side hustle.
And in the latter situation, it’s not inconceivable that you might make $15 to $20 an hour doing whatever it is you opt to do. So in that case, you’re looking at roughly six or seven hours a week of side hustling. Doesn’t that have a much better ring to it than working an extra 24 to 28 hours a month?
You need small wins to celebrate
Not only might setting a weekly savings goal help you approach your New Year’s resolution with more confidence, but this way, you’re giving yourself an opportunity to pat yourself on the back regularly.
Going back to our example, you could decide to do something special for yourself every week you meet your $115 savings goal, like treating yourself to a soothing bath or indulging in reruns of your favorite sitcom. You may even decide to blast a note on your social media page saying you met your weekly savings goal, or text some friends and have them cheer you on.
There’s nothing wrong with setting lofty savings goals if that method works for you. But aiming for a large number might cause you to get overwhelmed and give up. So instead of taking that risk, consider breaking a big financial goal of yours down into a weekly one. You may find that doing so makes it easier to achieve.
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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
