First, find the bright side. Even if you didn’t save as much money as you had hoped, imagine if you hadn’t set that goal at all. You’d still be back where you started — with the same amount in the bank. So kudos on making progress and getting serious about your finances.
Then, look at the setback as a learning opportunity. Rather than simply extending a goal’s deadline when the original timeline doesn’t pan out — or worse, taking on debt to finance the rest — diagnose where your savings plan went awry.
“Once you’ve reached that goal, or more importantly not reached that goal, I really think it’s important to look back at the spending habits and trends over the time and compare it to the budget you set up,” says Robert P. Finley, a chartered financial analyst, certified financial planner and the principal of Virtue Asset Management in Illinois.
You can do this by asking yourself a series of questions, Finley says, including:
The answers will help you determine if your goal was feasible. You can’t avoid paying a fixed amount for some things, like your mortgage or rent, but other spending categories, like eating out, have more wiggle room.
Based on your self-audit, make some adjustments to your savings strategy. If you’ve already cut your budget as much as possible, it might be time to find a way to make more money — at least until you reach your goal.
If you have your heart set on a vacation, for instance, you may be willing to take on a weekend job, babysit or work a side hustle to make ends meet, says Stephanie Genkin, CFP, the founder of My Financial Planner LLC in New York.
Or, you could make compromises to reach your goal sooner rather than later. “We’re looking at something that’s similar, yet maybe a little more affordable,” says Tony Madsen, CFP, the founder of NewLeaf Financial Guidance LLC in Minnesota. “Instead of going to Maui, is there a different trip that you can do altogether that becomes affordable for you?”
Whatever route you choose, avoid taking on debt to achieve a goal that’s not an absolute necessity. “The worst scenario is to charge it and then add 15% debt interest to your overall net worth,” says Finley.
Be your own cheerleader
As you pursue your goal for a second time, monitor your progress regularly. Madsen recommends setting check-ins at a cadence that’s comfortable for you. The goal is to analyze and adjust as you go.
Be sure to celebrate each milestone you hit along the way, too. Like most things in life, financial goals don’t have to be executed to perfection.
“If you ride a horse, you are sometimes going to fall off,” says Norman M. Boone, CFP, the founder and president of Mosaic Financial Partners Inc. in California, in an email. “The key to success is getting back on, resetting your goal and continuing to move forward.”