How would you like to achieve your wildest dreams? How would you like to accomplish anything? No matter how large…
Ok, perhaps that’s an exaggeration. After all, I might want to “be richer than Warren Buffet” but that’s very unlikely to happen no matter what I do.
But I’m talking big goals that are reasonable, though tough: Becoming a c-level executive of a multi-million dollar company. Retiring at 45. Getting in the best shape of your life. Being a great father/mother.
Any goal you have (within reason) is achievable if you follow one simple rule.
Daily Progress
Here’s the rule:
Small gains over a long period of time add up to big things.
This is the key I’ve used throughout my life to accomplish many of my goals. It’s useful in any area — business, health, relationships, and, of course, money.
You’ve heard about how to eat an elephant, right? Yes, one bite at a time.
It means you can achieve a large goal if you take small steps at it and keep with it. This is exactly the concept I’m talking about here.
Let’s focus a minute on how this principle works for building wealth, then we’ll branch out a bit.
Here are some money-related examples:
- Growing your career. If you look at the seven steps to growing your career they look overwhelming. Who has time to do all that in addition to their job? But that’s the point of this rule — you don’t have to do all that — at least not at once. Simply make some small progress every day. Maybe it’s a lunch out to network one day, a kind word to a colleague another day, and a performance discussion with your boss another day. None of those seem like a big deal, right? But do them day after day for years and you’ll make HUGE progress (and be rewarded with millions more as a result). This is EXACTLY what I did in growing my income over the years — just a bit of progress every day adds up.
- Saving and investing for FI. No one saves millions of dollars in one day. Slow and steady is the key to saving and then, ultimately, reaching FI. Consider these: $1 saved per day and invested at 8% becomes $141k at the end of 45 years (the average working career). $5 a day becomes $705k. $10 a day becomes $1.4 million. It’s not much each day, but slow, steady progress adds up big-time over a long period of time.
- Paying off a mortgage. Paying off the mortgage is the grand-daddy of all debt pay-offs. And yet no one pays it off in a short amount of time (at least the first time). It takes years of an extra payment here and an extra payment there to make it work. You keep chipping away at all debt until finally you get it completely paid off — including the mortgage.
The impact on your finances of daily growth over years and decades can’t be denied — it is very, very powerful! For me, it’s probably the key reason I reached financial independence and retired so early. I simply made plans then implemented them day in and day out for a couple decades.
Sure, there were times when I didn’t make any progress. But I kept those to a minimum and advanced my finances many more days than I did nothing. Automation in saving and investing was a big help in making this work.
Achieving Your Goals
There are many more money-related examples than just the ones above. Instead of going through more of them, let’s shift gears a bit and discuss how the principle works with other goals.
Consider these:
- Get in shape. There’s NO WAY to get in shape quickly. You have to work at it over a long period of time, do something regularly (if not daily — BTW, resting to allow your body to recover is doing something), and make a bit of progress every day. I’m in what I’d consider the best shape of my life and I still have a year and a half plus to get me where I want to be. My key to success will be daily working out, eating right, getting enough sleep, and so on. By themselves, none of these seem like they are making much difference in any given day. But when measured over time, they make a tremendous amount of difference — enough to save a life.
- Reading. I have always been a reader. But for many years it’s been hard to find the time to sit down with a book (especially when the kids were growing up.) There’s no way I could find an extra hour or two to simply read. So what did I do? I read 5-10 pages at a time. At one point I finished a couple books by reading 2-3 pages per day before work while making my coffee. Yes, it took me some time to do this, but I got through them. The alternative was that I didn’t read at all. I also shifted mostly to audio books years ago because I wanted to read more. It was easy to listen to a few pages every day and read book after book by just driving to work.
- Investing in relationships. I have a whole host of small tasks devoted to developing relationships with my family: giving complements, going on small outings like the movies or hiking, taking bigger vacations like a cruise, taking walks (great for talking with my wife), writing notes, and on and on. Nothing really big (except the vacations) but they add up over time. Stephen Covey talked about the emotional bank account in The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change
and that’s what I’m trying to do here — make small, regular deposits.
and that’s what I’m trying to do here — make small, regular deposits.I could go on and on, but I think I’ve made the point.
How to Make It Work
So what’s the practical application of this principle? I find a couple keys to be:
1. Breaking down the goal into achievable mini-goals.
Here are a few I’m working on this year:
- Instead of “lose 10 pounds this year”, work to lose 2.5 pounds each quarter.
- Instead of “climb Pikes Peak”, break it down to what I’m going to do each week of each month to train so I can climb Pikes Peak.
- Instead of “get 1,000 email subscribers to ESI Money”, set a goal for how much every month (or even day — I just need one per day at this point to hit my goal) and work towards that.
2. Develop and track daily steps/tasks to help reach the goal (exercising, eating right, etc.)
I have a spreadsheet that tracks every task I want to accomplish (daily, weekly, monthly, etc.) and even have a point system for completing them (more important tasks have higher points). I review it every night, rate myself for the day, and track my points to see if I’m making progress. I realize this is a bit over-the-top for most folks, but you can design whatever tracking system works for you. If you’re in business, you’ve probably heard the saying, “What gets measured, gets done.” It’s the same story here.
In summary, this simple principle has been the hallmark of my successful goal-setting for 30 years. No, I don’t get everything done, that’s for sure. But I do accomplish a lot over time simply because I make small progress every day.
Anyone else use this principle to get things done?
photo credit: brainstorm1984 Afrikanischer Elefant / African Bush Elephant via photopin (license)
Great advice and so true!
The little things create massive change over time.
I’m a huge fan of this particular tactic. One day at a time, one small milestone or step forward.
Very true in both directions.
People get into financial trouble a little bit or one crisis a time.
To make positive progress you need to continually improve your situation.
Just like the journey of 1000 miles begins with the first step, the road to FI is saving that first dollar and continuing on saving.
In the chorus here that it starts with small steps. However, patience is not one of my better traits. After all, I’m a product of the video generation and I want everything to happen quickly, though I’m not willing to take a big hit in suffering for small gain.
I’ve been making years of extra payments on my mortgage in amounts that were large compared to my salary. An extra $500 or $700 whenever I could squeeze it out of the budget by not buying new clothes or being diligent about turning off lights. It wasn’t until I switched jobs and got a huge base increase that I saw the impact on my mortgage. I increased living standard slightly to go with the new higher salary, but quintupled my extra payments.
At the old job, it was going to take me 8 more years to pay down the mortgage. Now I’m 22 months into new job and hoping to have mortgage wiped out by year end. In fact, I could pay it off now if I sold espp stock from old job, but I’m trying to be patient.
With all of the additional payments I had been making over the years, I recast my mortgage to reduce my monthly payment. That saved another $300 in interest that went directly to principal. I’m already feeling the “lightness” of not having the burden of a mortgage.
Great reminders. I like to think of the continuing small gains in skills as analogous to compound interest in investing. With a long time invested in skills or money, and consistent even small percentage gains, the total effects can be huge. In money of skill building, start now and keep at it.
I completely agree that small actions over time consistently lead to big results. That’s part of my motivation to work on myself each and every day.
It reminds me of my favorite quote:
“Your level of success rarely exceeds your level of personal development, because success is something you attract by the person you become.” – Hal Elrod
I don’t write my goals down daily, but I do have monthly goals.
Thanks for sharing ESI
A good book that covers this topic in depth is “The Compound Effect” by Darren Hardy. I highly recommend it.
This really works and I try to do it myself. If you think about the 100’s of things you need and want to do it can become overwhelming and likely you wont want to do much of it. Breaking down any goal into multiple smaller tasks can help you feel some achievement and build momentum which I find can be very powerful.You have to realize you are only human and can only push yourself so hard for so long. I try to set reasonable tasks to complete over each day/week/ month/ year. Even if I come up short, I still feel good about the progress I’ve made.
LOL , this is great … I’m refocusing using this principle of a daily dosage of “doing” … Also reading “The Compound Effect” by Darren Hardy like Steve mentioned.
I think this tells me i’m on the right track …
Thanks,
Yes! I know what my specific long term goals are (10 and 20 years) and try to break them down into steps I can take right now to get there. I admit, I’m far from perfect and get side-tracked now and then, but I go back to those goals and refocus when this happens. I actually love the spreadsheet idea…I might have to steal that one. 🙂
Love the elephant analogy. It’s one of my faves. Totally agree the little bits of progress each day can lead to huge rewards down the road. All too often people lose sight of their goals and allow themselves to be sidetracked.
Story about my BIL. Many years back we were sitting there and he was complaining how he had no money saved. “Can you save $25 a week?” I asked. He shrugged, “yeah, I could.” “Twenty five dollars a week is roughly $100 a month or $1200 a year.” “Man, I’m talking having real money saved, like ten times that,” he said. Fast forward five years and he’s again complaining about not having any money. “Can you save $25 a week?” I asked. “Yeah,” he says then adds, “Didn’t we have this conversation years ago?” “Yes,” I replied, “and if you had listened then you’d have $6000 sitting in the bank, is that starting to be “real money” to you?”
He still didn’t get it, even when I pushed and said that it wasn’t always about the money, but about developing the habit and then building upon the habit and how the more you do that the more you shift the mindset and how more opportunities can be seen. He still didn’t get it even when I explained that I started each child with $20 a paycheck towards college and bumped that up by $5 when I got a promotion or a raise and that even though it wasn’t likely enough to fully fund college even after 18 years it sure was better than not having any money earmarked for their schooling and for the most part covered my promised commitment. Nope, in his mind if he couldn’t have $10K saved at the end of the year, it wasn’t worth trying. Crazy and unnecessarily self limiting.
Iterative progression is key in doing anything. Pretty much anyone who is great at something was not born that way. They got to be that way by setting goals and working toward them over time. The same is true with finances.
I need to do a better job of setting short term goals. I’ve got a triathlon to run this summer, and the workouts so far have been brutal. I’m no longer the young cheetah and need to shift my expectations to incremental gains. Lol
Love this post! I do try and chunk down big longer term goals into smaller short-term actions and habits to get me there. Currently, I use my day planner but I like the spreadsheet idea and may incorporate that. Thanks for sharing your process ESI.
I love this post! I’ve been using the same philosophy to “eat the elephant” of making updates in our kitchen. I felt so overwhelmed, I didn’t know where to start. So I began with the smallest task I could think of to accomplish (which was cleaning off the electric outlet plates) and I felt like I was making progress. It made the overwhelmed feeling go away, amazingly!
In our yearly goals, we break our big goals up into quarterly goals, and that really helps as well. Feeling like you’re successful at something breeds more action and subsequently more success.