• Strategies and Tactics

    by  • August 10, 2011 • Money Management and Planning • 1 Comment

    So you want to take your life in a new direction. Specifically, you want more financial security. You want to get out of debt, stop living paycheck to paycheck, or pursue other financial goals. Your financial situation has been causing you anxiety for a long time, years or even decades. You’ve tried and tried to make the change but haven’t yet been successful.

    I know how you feel.

    When you’ve been struggling with something for a long time it often feels that there’s simply no way to overcome it. This is false.

    Struggles with money can be particularly difficult because money enables so many other things in life. When you don’t have a handle on your finances, you behave in one of two ways:

    1. You accept that you can’t do or have some things because you can’t fund them. This stinks. But it’s the healthy approach.
    2. You bend or break the rules, funding things with money that you don’t have. You take on debt. For you, this is bad.

    If you’re willing and able to accept the fact that you can’t have everything, then we’re in business. If you’re not, everything from this point on won’t be of any help. Come back and continue reading when you’re ready.

    Strategies – The Big Picture

    Strategies paint your big picture. I know of only two strategies for building wealth: reduce spending or increase income.

    That’s it. Pretty simple yeah?

    If you want to read a bit more about these strategies, Daniel Hoang goes into more depth on his blog.

    Tactics – The Real Work

    Now that you know what you’re going to try to do (reduce spending, increase income or both), tactics are how you’re going to do it.

    For example, these are some tactics for increasing income:

    • Start a side business.
    • Sell stuff.

    Here are some tactics for reducing spending:

    • Use coupons.
    • Downgrade services like cable or internet.

    There are zillions of tactics for both strategies. And once you try a few, you’ll begin to find new ones here and there.

    Len Penzo has a wonderful blog on which he recently published an article titled 50 Personal Finance Habits Everyone Should Follow. Read it for ideas on tactics that might help you.

    Measuring Progress

    MVP is a term used by entrepreneurs and business people. It stands for minimum viable product.

    According to Wikipedia: MVP is a strategy used for fast and quantitative market testing of a product or product feature.

    I think about MVP in a slightly different sense. To me, MVP is all about doing the absolute minimum amount of work, or making the smallest possible change that will demonstrate tangible progress toward a goal.

    For me, there are two rules for MVP:

    1. Progress isn’t progress unless it can be demonstrated. It doesn’t matter how much or how little effort you put into pursuing your goal. What does matter is that you’re actually moving in the right direction.
    2. Any work above and beyond the absolute minimum required in order to demonstrate progress is effort that could have been spent elsewhere.

    The easiest metric for measuring progress is your bank balance. But it can be other things as well. Fewer overdraft fees, less anxiety about money, sticking to a budget, being able to invest. Those are all valid indicators of real progress.

    Sustaining Momentum

    Meaningful change takes time. And it requires stepping out of your comfort-zone.

    All stick and no carrot doesn’t work. The human brain doesn’t work that way. Rewards for achievement are necessary for sustaining motivation.

    Whatever tactics you choose, they should provide some form of reward. For example, cancelling your cable TV doesn’t provide any positive feedback. If you like to watch TV, going without cable will just add to the existing burden of knowing that you’re not where you want to be financially. So, give up the $50 monthly cable TV subscription and buy yourself a Netflix subscription for $7.99/month instead. You’ll save $42/month instead of $50. But you’ll still be able to watch TV.

    Again, it’s about making the smallest possible change you can in order to move in the right direction. It’s not about how much you can sacrifice for the sake of proving how committed you are to your goal. What counts is that you actually achieve your goal!

    Here’s a more in-depth discussion on Gaining and Sustaining Momentum from Pastor Andy Stanley if you’re interested.

    Be Creative

    If being frugal doesn’t come to you naturally, if being in debt is the norm rather than the exceptional case, it’s OK. As long as you’re committed to making a lasting change toward a lifestyle of healthier spending and saving, you can change. But you’re going to have to figure out how to do it on your own.

    Nobody other than you can tell you exactly what to do in order to achieve your financial goals. There are zillions of people who can and will offer you advice. But none of their advice will fit without some alterations. Other people will tell you what worked for them, or what friends of theirs told them worked for them. But there’s no one-size-fits-all set of tactics that works for anyone.

    Be Persistent

    You will try tactics that don’t work at all. You’ll try others that will work for a while and then stop working. Yet others will work but prove too difficult to sustain. This is all OK.

    You’ll learn what works and what doesn’t. You’ll learn to prioritize the elements of your life into needs, wants and clutter. You’ll learn to shed the clutter, defer gratification on the wants and find some way to make room for the needs.

    The one thing that I do know for sure is that bad financial habits will not leave you alone. They will nag at you and make your life miserable until you replace them with more healthy habits.

    The anxiety and frustration, even downright sadness that comes from bad money management will drive you to look for a better way. And after you’ve found the better way, every time you “fall off the wagon” you’ll be reminded just how much it stinks to go back to your old ways.

    So stay hopeful and be persistent. Find tactics that work for you and find ways to make them fun. Once you get the hang of them, they’ll feel like second nature. By that time you’ll know just how powerful good personal financial management habits can be at building wealth. And the dark days of the past will be long behind you.


    I had an unhealthy relationship with money until my early 30's. I write about how I developed a healthy relationship with money. I share ideas about personal finance that have helped me to break the cycle of living paycheck to paycheck and achieve greater financial freedom.

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