Personal Finance By DR. KYLE O'HAGAN 2028 Views

How setting mini-goals can help you reach financial freedom

Ever heard of The Debt Snowball? It’s a debt reduction strategy, developed by Dave Ramsey, that has gained a lot of popularity over the years. Against what we think makes logical sense, Ramsey suggests that we pay off our smallest debts first – not necessarily those with the highest interest rates.

Why? Well, nothing feels better than settling an entire debt (no matter its size), right? By starting with the smallest debt first, you almost always guarantee yourself the encouragement of steady and consistent progress. But not only that – Ramsey also highlights that The Debt Snowball method can also change our relationship with money, making it more intentional, structured and consistent.

By focusing on paying off one debt, we reinforce our confidence and ability to pay off the next.

I won’t go into all the details about this (because that’s a topic for another post), but if you’re interested in finding out more, you can read about Ramsey’s method here.

For this post, I want to focus on how we can learn from The Debt Snowball method and apply it to our financial goals. I’ve called it The Goal Snowball.

1 | Make Your Financial Goal List

We all have a million ways that we’d like to change our lives. It’s why New Years’ resolutions take over our Facebook newsfeeds towards the end of each year. The desire for transformation is what drives us.

Maybe you’d like to lose 10 pounds? Or maybe you want to be better with managing your money? Possibly thinking of a change in your career path or you want to start up a venture you’ve been meaning to get off the ground?

We’re very good at making lists. But maybe not so good at ticking them off. And I believe this is due to one simple mistake that we make: we make a very long, very broad list of goals.

I think our intentions are well-meaning. But, often, our enthusiasm for creating financial goals overshadows the time and effort it takes to see them through. As a result, we create goals that are too ambitious or we create too many that we can’t seem to juggle them all.

My advice on how to fix this

Rein in your goal-setting strategy.

When you first start out writing your list, feel free to put down as many ideas as your heart desires. Dump everything out onto paper. But then be strict with yourself. Out of all of those that you’ve written down, select 5 or 6 financial goals that carry the most emotion for you. To find out more about how to select the best goals from your list, take a look at a previous article: How to Set S.M.A.R.T.E.R. Financial Goals.

Why stick to the 5 or 6 financial goal limit? Well, you want a list that is manageable. There is no point in trying to achieve everything at the same time. If you’re a jack of all trades, you’re a master of none. Pick the few goals that resonate the most with you and where you’re at financially. And keep the rest on the back burner.

2 | Order Your Goals Correctly

Okay, so you’ve created your list of 5 or 6 financial goals. Take a moment and pat yourself on the back. You deserve it! But what’s next?

In the Debt Snowball method, Ramsey suggests you order your debts from smallest to largest, regardless of interest rate. How can we apply this to our method? Well, for the Goal Snowball, you can order your goals in order of easiest (or most feasible) to hardest, regardless of the return on your time and investment.

So, using the example above, it might look something like this (but, of course, this will vary from person to person):

In this instance, this person feels like reading a financial blog to get educated on their finances is probably the easiest. Only then, once they’ve figured out what to do, they’ll create a budget. Within that budget, they want to first prioritize an emergency fund (which is super important – check out this article to find out why). And, only then, do they feel like they’d be in a space to increase their savings rate. Easiest to hardest.

3 | Focus on One Financial Goal at a Time

Okay, awesome!! You’ve probably finished the most difficult part.

Now is the time to hone in on your very first financial goal and tackle it with all you’ve got. Scientists have shown that it takes up to 66 days for you to develop a habit. You want to focus enough time and energy on your first goal so that it does just that – becomes a habit. Do you now understand why I suggest only 5-6 goals on your list? There are only 12 months in a year – enough for you to fully prioritize each one.

There is no point in investing in a financial goal if it means you work at it for a month, only to ditch your efforts soon after and return to square one. Similar to the Debt Snowball, the purpose of the Goal Snowball method is to change your relationship with goal-setting – to make it something intentional, structured and consistent. You should be in it for the long-haul.

So, what are the benefits of focusing on one financial goal at a time?

You won’t be overwhelmed

You’re laser-focused on one thing at a time (in other words, you won’t be a jack of all trades, master of none)

You’re able to better track your progress (instead of trying to track multiple goals at once, which all may have differing progress metrics)

You’ll find that this strategy is not only easier, but also more enjoyable. I love this quote by Will Durant: “We are what we repeatedly do. Excellence, then, is not an act but a habit.” Focus on one financial goal and make it a habit.

4 | Move On But Maintain

So, you’ve achieved your first financial goal! Celebrations are in order!

The logical next step is to move on and tackle your next goal. But it’s important to remember that any goals that preceded the one you’re working on can’t be neglected altogether.

It’s counterproductive to set a goal, make a habit of it and then let that habit slide over time. The last thing you want is to undo all the hard work you’ve put into achieving your previous goals. The take-home message for this section is: move on but maintain.

The point of the Goal Snowball method is not only to set financial goals but to build onto each goal as if it were the foundation for the next. It might take some adjusting, but be patient with yourself.

Using the above example to illustrate my point, if you were starting to tackle goal #3, you’d still want to maintain goals #1 and #2, even if you’ve successfully achieved them. This would mean you’d want to maintain reading finance blogs (to better educate yourself) and you’d want to stick to a weekly or monthly budgeting schedule. 

5 | Let the Goal Snowball Do its Work

So, why is it called the Goal Snowball? I thought an image might better illustrate what I mean:

Even though your goals may seem small at the beginning, when you start to work through them one by one, you will begin to gain momentum and speed while developing good financial habits (illustrated by the size of the snowball growing).

This reinforces that you’re capable of financial success, giving you the confidence to move forward and tackle your next goal.

Setting financial goals doesn’t need to be complicated or overwhelming. You simply need a more focused, structured and intentional approach. Give the Goal Snowball method a try and let me know if you find success in using it.

If you’re ready to start the Goal Snowball and getting your finances in order, download our FREE Financial Starter Pack, which contains printable monthly goal worksheets and a budget template to help you get started today.

Dr. Kyle O'Hagan is a UCT scientist and an avid personal finance blogger. With over 20 years worth of experience in the SA schooling system, he has come to appreciate the value of a proper education and feels that personal finance is an area that is often neglected, particularly at a young age.