Achieving a big financial goal is hard. Paying off the mortgage, securing financial independence, retiring early – or at all…
When a plan demands discipline over a decade or more, how do you stop yourself going off the rails?
Doing it on auto-pilot is one way: you resign yourself to a multi-decade slog that becomes its own analgesic.
But even then, you’re throwing everything at it and have precious little to show for your sacrifices. No fit bod to parade on the beach. No medals. Nothing to post on Instagram.
How can you make your progress tangible enough to stop your goal going the way of so many diets, exercise regimes, and plans to change the world?
My answer is to lash myself to the mast with a sailor’s knot of mind-tricks:
- Checkpoints – artfully arranged to regularly boost morale.
- Redefine the goal – like a government target that shape-shifts for benign reasons rather than to ‘hoodwink the electorate’.
- Sharing your secret – declare your intentions to the people you care about failing in front of.
- Write your own story – a grand tale that convinces you that you’re doing something worthwhile.
- Future-gazing – indulge your dream just enough to follow it.
Here’s some tips on using these tricks to get over the hump.
Checkpoints
Split and lap times help athletes to pace themselves and measure their progress.
It’s the same for us.
- Splits show you how far you’ve come at each waypoint on your journey so far. For example, you may have £10,000 invested after one year, £25,000 invested after two years, and so on.
- Lap times measure your progress from one waypoint to the next. For example, you put away £10,000 in year one, and then grow your pot by another £15,000 in year two.
You’re likely to gain a bigger psychological boost from lap times when you start out – your initial progress can seem dazzling if you’ve not saved or invested before.
As for splits, to make these effective at the beginning you should measure your progress from your start point and not your end point.
“I’ve socked away more money than I’ve ever saved before in my life,” works much better than “I’ve saved 5% towards my overall goal,” while “Wow, we’ve doubled our stash in our second year,” is much more life-affirming than “We’ve still got 90% of the way to go.”
The higher your savings rate and the more you invest, the more likely it is you’ll be able to rocket out of the gate and clear the hurdles when momentum slows.
Try flipping your view between percentages and figures. I was thrilled to accumulate my first four-figure sum. Later, you’ll earn a high five when you hit five-figures. Then, somehow, a five-figure portfolio becomes routine… until six-figures is around the corner. Did you ever think you’d see the day? I thought only debts came in six-figures.
Later you’ll only rub your eyes when your number is reporting mid-six figures. And then high six-, and then…
Use the halfway line as your initial lure. Everything speeds up once you’re past halfway. You’re on the downhill section and the grind turns into your countdown towards the finish.
Around that point it’s better to measure your progress against what’s left to do.
Halfway becomes one-third, melts into 25% then only 10% to go. Switch between percentages, fractions, and figures. Or picture the remainder as a pie, a mountain path, an escape tunnel reaching the surface… whatever doses you with dopamine.
Every year of a 10-year plan theoretically contributes 10% to the total – but your fourth year from the finish could knock 25% off your number, the next year could be worth 33%.
Granted, investment returns will also push you back and propel you forward.
But I’m talking about visualising the journey here, not the precise outcome. That’s subject to events beyond our control.
How many checkpoints?
I set my checkpoints close enough together to give me a regular shot in the arm, but far enough apart that I don’t numb myself to the rate of progress.
The higher your savings rate and the less susceptible you are to desensitisation, the more checkpoints you can have.
My brain enjoys two overlapping sets of checkpoints.
Row 1: “Come on Accumulator!”
My first row of juicy carrots is planted four months apart.
I look at how much I’ve put away every April, August, and December. Note I’m only looking at savings here, not my total stash. The market has often knocked me back over these short three-month periods, so I try not to look at my overall portfolio value.
Early on, your savings rate is likely to swamp any market noise. Later, you’ll have to rationalise the downturns by consoling yourself with buying on the cheap self-talk.
Why don’t I check my portfolio quarterly, like I do with our Slow & Steady model portfolio?
Because it’s less hassle to do it tri-annually, the progress bar is fuller, and I get enough quarterly BS in my day job.
Row 2: So far-y, so-goody
I have a second row of carrots that I nibble on a six-monthly basis – in May and November.
That’s when I compare our net worth (including our portfolio’s total value) to the same point 12-months previously.
These checkpoints anchor to the anniversary on which we first started down this road.
The point of checkpoints
The two row system works for me because each tunes into a different wavelength.
The triannual check provides a steady beat. Meanwhile our savings rate is high enough that we nearly always register some progress against the same position a year ago. (Although admittedly it helps that we’ve been investing through a raging bull market.)
What’s more, the two rows of carrots give me five data-points that tickle the brain in different ways. I even maintain mental Chinese walls between them by logging the numbers on separate spreadsheets.
You can view your progress through a third lens by stretching your scale across the years.
This one – like so many of my best ideas – I got from Stalin.
Uncle Joe liked five-year plans. My regime uses three-year plans.
Anything beyond three years seems like forever to me. But the potential for transformation within that timeline is almost magical to my mind. When Mrs Accumulator and I are running on empty, we compare our progress against where we were three years ago. The difference is always astonishing, and the sacrifice feels worth it.
We tell ourselves we can review things again in three years. Maybe we’ll make different choices if it’s not working?
Three years later, it’s always working. (I know, I know – past results are no guarantee of future performance.)
My system might not be right for you. So invent your own checkpoints – as many as needed to reliably shoot a positive jolt through your brain circuitry. Balance your need for pep talks to get you through the funk against your need to see meaningful progress.
(If you’re checking weekly or six times daily then you have a problem!)
Redefine what you’ve achieved
Your efforts create your progress, but you can be creative about what progress looks like. While my final destination is complete financial independence, it helps to celebrate the smaller milestones along the way.
For example, you could take comfort from achieving any of the following:
- “We’ve got an emergency fund that’ll see us alright for the next three years if we’re scrap-heaped at work.”
- “I’ve got enough in ISAs to take the next year off!”
- “My SIPP could now fund retirement from age 68 – if you include the State Pension.”
- “My SIPP could now fund retirement from age 68 – even if you don’t include the State Pension.”
- “We’ve got enough to fund our essentials for the rest of our lives, but not yet the luxuries.”
- “We can FIRE if we reduce our annual budget by £3,000 a year.”
- “My stash allows me to sack off full-time work and go part-time at X hours per week.”
- “We’ve got enough for one of us to be financially independent. If I died tomorrow then my partner would have enough to live on. Mental note: must check the brake cables.”
And so on.
Allow your ego to take a bow – as long as it doesn’t endanger the overall mission – and bask for a moment in how much you’ve achieved, even though there is still some way to go.
Redefine what you need to achieve
Keep learning, and you may become happier about living off a smaller amount.
Perhaps you started out thinking you needed a million, or that you wanted to live off your dividends.
But later you might learn enough about sustainable withdrawal rate (SWR) strategies to be comfortable with a different balance of risk.
Maybe you decide a higher SWR is appropriate for your situation. Or maybe you’ll come to model the State Pension as part of future cashflows, rather than dismissing it as an abstract concept that won’t ever figure in your life.
Perhaps you’ll learn how to live on less, or finesse your understanding of the tax system or annuities, or you’ll downgrade your desire to leave an inheritance?
Pulling on such levers can change the game.
Sharing the secret
I’ve let a few people into my inner FI circle – not to mention the Monevator readership.
I don’t want to let myself down in front of the people I’ve told.
Nobody else, bar Mrs Accumulator, has any skin in our game. They wouldn’t care if I failed. But their knowledge of the plan makes failure less palatable to me.
Pride, eh? Not normally a virtue but you can make it work for you.
Writing your own story
You against the world. You against ‘the man’. You fighting for freedom, for change, for a better future.
Inching towards a number on a spreadsheet probably won’t sustain you for long. But setting your struggle within a meaningful narrative is the backdrop to all human endeavours, even mine.
Make sense of your pain by telling yourself why you’re doing it:
- You’re on a grand adventure.
- You’re doing something really hard that few will – or even can – do. (True!)
- You’re gonna be a secret millionaire.
- You’ll be happy.
- You’ll be secure.
- You’ll spend more time with those who matter most.
- You’ll pursue your true calling and never do anything just for the money again.
- You’ll evangelise for a better way of life.
- You’re prepping for the fall of civilisation.
- You’ll live a better life aligned to your values.
Perhaps this sounds flippant but I really believe it. Do it right and the road to financial independence can catapult you up Maslow’s heirachy.
Financial independence isn’t the end of all your troubles obviously. It doesn’t solve anything for some, but others have flourished.
Future-gazing
Every now and then, maybe once a year, Mrs Accumulator and I will talk about our hopes for our financially independent future.
We’re much older in that world – much older than we ever pictured. But it’s a happy place, and for a few moments we can draw some energy from that future timeline to power our present day. Optimism is human fuel.
Take it steady,
The Accumulator
- Financial Independence, Retire Early. [↩]
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I always liked the parable of the three stone cutters. Someone asks them what they’re doing. The first answers “I’m cutting this stone because someone told me to”. The second answers “I’m working to feed my family”. The third answers “I’m helping to build a cathedral which will stand for a thousand years.”
Reality as we experience it is largely subjective, so choose the viewpoint that gives you the most motivation, enjoyment, etc.
Great post!
My blogging, ie ‘sharing my secret/declaring my intentions’ is a huge motivator – I can honestly say that without it, I wouldn’t have stayed on course for so long.
When I total up my dividends each month, I take great satisfaction in working out what household bills the income covers as it puts it all into perspective, rather than just numbers on a spreadsheet.
And as for telling myself why I’m doing it, I agree with all on your list, apart from becoming a secret millionaire (unless I strike it lucky on the premium bonds!) 🙂
“If you’re checking weekly or six times daily then you have a problem!”
– ok… then I have a problem (3x a day)
Great post – I’ve sometimes got myself through horrible jobs this way, e.g. by Tuesday lunch, I’ve “paid the bills for this week”, etc.
As someone who’s volunteered for Samaritans, though, I have to say that I think it’s also important not to attach *too* much of your sense of pride/self-worth to money-things. We also make financial mistakes and things go wrong (illness, etc.). I think it’s harder to deal with for people whose sense of self-worth has been very wrapped up in the achievements. Hard to get the right balance sometimes!
A major milestone for me was when monthly dividend income started to match what my initial monthly contributions had been. The next major milestone was when I realised that I ‘would’ theoretically be able to survive -with a lot of sacrifices – even with no pension. Only 2-3 years left before I can walk off into the sunset, whistling a merry tune.
@haphazard – I dont think anyone wants to be too money orientated, it’s just for lack of better things to focus on for the financially astute anyway, or a hobby club kind of, an intelligent talking point, but at heart it probably isnt the most important thing
But I suppose its different for the non astute and they have different motivations and their problems have a different root
I think we maintain discipline for lack of a better option, by reminding ourselves why we do it
> secret millionaire
It’s not totally a secret because we had a discussion at work about training. Some courses are repeated after 3 years but I said none of us would still be here. He’s 56, he’s 57 and I’m 52 have over 1.1 million invested (plus a flat).
My brother is filthy rich and has a Skoda. The hilarious thing that happened a few christmases ago was he told us he’d gone part time. Our mum started wittering about was he saving enough for retirement while I realised he was avoiding (much) exceeding the pensions lifetime allowance.
Now 73 and look back at it all occasionally
Wife and I had vocational careers-Vet and Teacher-enough money but prime driver was delivering outcomes
Vet always had a good new car as part of job-farm practice-male ego satisfied at little personal cost
Always lived in a small cottage-saved a lot of money-now its very suitable for 2 retirees-too small for children to come back!
Most satisfactory outcome -a picture every year of the patriarch and patriachess with 3 children plus wives and husbands and 8 grandchildren
Nothing directly money related- money needed like oil in an engine-we are humans however not machines
Money is important but…………………
xxd09
I love this sort of stuff. I like to acknowledge the day every year that my current stash will support my current spend (so 25% of the target stash would be end of March, 75% end of September etc). I also draw a bar chart with my annual expenses ranked in order of importance and a line part the way up to show what the stash can support (it’s like your “I can FIRE know if I give up crystal meth”, but with more granularity). I have a lot of charts and they bring me so much nerd dragon joy.
When the markets are going up, I update my net worth spreadsheets. When they go down, I concentrate on the net savings side of the coin. This just about keeps me sane and on the path.
Not sure that I think that I have too much money ( probably with a view to supporting grown children), however I realise that I don’t actually want anything that I don’t already have, and what I do want ( eg certainty of the future) isn’t mine to buy. I suppose that’s good in a zen sort of way.
The egregious experience of watching a friend slavering whilst he explained the benefits of the double crown on his gold Rolex ( or something like that, I wasnt listening) was horrible ( a life long Labour voter and now ex friend).
Calculating how much of the bills are covered by divis is very nice! As is visualising the expenses you can’t yet support. That’s a great way of deciding what’s truly necessary in life. Think I’ll try that for Mrs Accumulator and I and see what discussion that prompts.
I’m always fascinated to read comments from those who’ve made it and are looking back at the path they’ve taken. It’s quite rare to hear anyone in that position express regret, which fills me with confidence that it’ll be worth while.
Being a secret millionaire must be a tough secret to keep!
Re regrets-I suppose it is like those class reunions that one goes to -only the successful turn up -skewing the statistics of achievers and non achievers
Not many brave souls post their disasters in public
Sheepdog is a poster over on the Bogleheads forum that did one that has helped many investors/retirees
xxd09
@TA. In a phrase worthy of Yogi Berra I could say that the future lies ahead of us. I agree with the floor and upside approach and having established the floor, what’s left determines how ‘ rich’ you are. The current demographic means that many of us have caught the dying embers of the dB era which makes things easier as there is an element not entirely exposed to future events. My feeling is that despite the nasty arithmetic, some element of the pension should always be from an annuity or equivalent.
My only other point is that pension calculations challenge the normal sense of value. I no longer know whether, eg £150k, is a large amount. My former self would have ridiculed this. So having a million plus isn’t the comfort it might once have been, secret or no secret.
The advice I was given ( company HR) was that 38 was soon enough to start adding via avcs. Ok, times change but it would be sad if 20/30 something’s lives were disturbed by worries of old age. The future lies ahead of us so get on and live it ( top tip, if you get just one thing right – don’t get divorced).
If you’re investing for dividend income then comparing that income against your spending is a good tracker and motivator in my view. When I shifted to investing for income my dividend income moved up from being 30% of spending to 46% the next year. That progress was most encouraging.
Automating is the key. I have some savings go out first of the month by Direct debit. That way I don’t notice or think too much about it. Then top up end of month if there is surplus.
Why auto enrolment is such a good thing, as your average joe wont save otherwise.
I also think tracking your journey is a good discipline so that you can see the bigger picture of where you are going.
Im not into micro managing investments, dividend investing etc as don’t think it’s necessary. Although I check more than I should.
I’ve come to thinking recently that a comfortable retirement is a better goal than an early retirement, it’s not much good if you’re stuck for decades on the breadline, and you can cram more living into fewer years with a later retirement, and have more security.
I imagine the wife (I call her wifi and she calls me hubs) would want to go out and spend more in retirement, and generally only enjoys activities that cost money (even free days out you’ll end up eating in a cafe)
Loving hearing the different personal perspectives on this not to mention the Yogi-isms. The rest of our lives is a long time.
My spreadsheet helps to keep me motivated. It shows if we are on track, and rough timelines to F.I.
I think you’re on the right track, trying to figure out what motivates you is important. Things that motivate my wife are meaningless to me, and vice versa, so it can be a challenge to integrate your goals.
I pay attention to the market, I look a lot; it’s fine when you’re just trying to understand it all. Not so fine when it’s the result of fear. During bad times, I go away for a while. Let it roll, then go back when I can bear it again.