When you add accountability to established financial goals and action steps, the possibility of achieving your goals increases exponentially.
A lack of accountability does not lead to change or growth—it leads to stagnation, ineffectiveness and complacency.
What if we Committed to Accountability?
Many people who have achieved financial independence have done just that.
What step do you need to take today to begin embracing accountability? It could be as simple as calling a coach, mentor or trusted partner and giving them permission to hold you accountable.
Another way to accountability in terms of savings is automatic deposit. If you want to set aside a certain amount of money every pay period, for example, have that amount automatically deducted from your paycheck into your savings account or an investment vehicle.
You won’t have to think about it, and will probably not even miss the money if you make it a relatively small amount. Over time, challenge yourself to raise the amount bit by bit.
Accountability in Personal Finance
Accountability in personal finance means:
- Being honest about your spending
- Planning for the unexpected, not just the likely
- Accepting responsibility for your choices
The specific situation doesn’t matter; what matters is how accountable you are to your own choices in the situation. And your choices have a direct impact on your finances.
For example, you could say you got into debt because you lost your job had an unexpected expense. An accountable person would say, “I got into debt because I kept my old spending habits after I lost my income/had that big home repair.”
Let’s say your car is not reliable any more. Do you buy a new car or a used one? Look carefully at your income. Talk to your financial mentor. Decide what makes sense for now and in the future.
Accountability is the biggest trait that will define your long-term financial success.
Toward 100% Accountability all the Time
Being totally accountable all of the time is not easy. We all have those moments when we feel we MUST buy something we don’t really need.
But you can build up to more personal finance accountability. Here’s a step-by-step approach from The College Investor:
Step 1 – Know Where You Stand
Do you know what's in every bank account, on every credit card, how much debt you have, and where all your investments are? Find out, then put together a full picture of your monthly spending by logging every expense.
Step 2 – Make a Plan
Decide to boost your emergency fund to six months of expenses, or to pay off your debt. The more detailed your plan, the more accountable (and successful) it will be. For example, if you forego Starbucks for six months, how much could you save? How much of your debt could that shave off?
Step 3 – Being Honest about Consequences
Accountability requires understanding the consequences of your choices. Not having an emergency fund could mean higher debt, bankruptcy and not achieving other goals like buying a house, for example.
Step 4 – Course Correct
Put systems in place so you can course correct as needed. Everyone does something irresponsible from time to time, so how can you make sure that one instance doesn't become a habit?
Talk to your coach or mentor, or use free financial management software that sends you an alert if you go over your budget in one category.
Step 5 – Start Again
Typically, failure is the result of unaccountability--you didn't include a credit card, or ignored spending over several days. Consult with your financial coach, go back to Step 1 and try again. It’s a journey, not a destination!
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This content is developed from sources believed to share accurate information, and provided by Kelly Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and materials provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.