4 Commitment Devices to Help You Set & Achieve Financial Goals

Like billions of people around the world, you probably have numerous financial commitments. You most likely also think ahead to the future like any other common man. And why wouldn’t you? You need to fulfill these everyday obligations, as well as save aplenty for future.

Unfortunately, most people want to be rewarded but aren’t willing to put in the hard work in order to accomplish their goals. Though some people create budgets, many don’t have the drive to stick to it. They spend beyond their limits, slip into debt and after a long hibernation, wake up from their financial slumber and realize they’ve dug themselves into a rather deep hole.

Making goals

If you’re one of those who has difficulty sticking to a budget, you might want to consider, ‘Commitment Device’. The term was first coined by economists Steven Levitt and Stephen J. Dubner, who went into great detail on commitment device in their bestselling book, Freakonomics. This economist duo is also writing a blog which bears the same name. Commitment device refers to a contrivance that will chain you to a course-of-action, resulting in you achieving your desired effect. Here are brief descriptions about 4 commitment devices that will help you achieve your pre-set financial objectives.

Let Others Know

Tell those close to you that you have certain financial goals in life and that you are committed to fulfilling them. If you have no qualms in swallowing up your pride and being transparent, post your goals on Facebook. “I will payback all my debts in next 6 months,” is an extreme declaration that will keep you under pressure to live up to your goals. However, you will also receive the encouragement from your friends and acquaintances in your Facebook community. Sharing your monthly status report about debt payment will only make it easier for you to stick to your budget, all while showing your friends that you are serious about your promise and obligation.

Think about Online Help

Some psychologists and economists have started an innovative website that helps people follow their objectives. A site stickK helps you with commitment contracts that are regularly scrutinized by a referee to ensure you’re staying on track, and getting on you when you fall off the wagon. Goalmigo is another good choice if you thrive under peer pressure. This website allows you to set and share your goals with other users who share similar financial plans. Goalmigo also allows you to track your financial performance. If you search the Beeminder website, you can create a blueprint of your goals and monitor your progress as often as you like. With the principle value, “Either perform or be penalized,” Beeminder will help you take on all of your goals, assisting you with every step along the way.

Issue a Check to a group you dislike

Every one of us has a strong disliking for an organization; the one that champions nothing but poor ideas that simply cannot be tolerated. Issue a check in the name of this group or organization and drop in mail box whenever you fail in goal fulfillment. You may have some friends who also hold the same view of said organization. Tell them about your plan. When you share your goals with those who share your interests, they will jump on board and help you however they can to make sure you don’t send that check.

Prize for failure

It should be noted that this method does not work best for everyone. However, if this method does work for you, promise yourself that you will spend on frivolous purposes in the event of failing to pay back dues. If you are the type of person who doesn’t like to “reward” yourself this way, you will work harder to escape any embarrassment caused by a preventable failure. However, some people don’t feel punished by this kind of reward, which means your plan itself will ultimately result in failure. If this happens to you, drop the idea and find a reward system that will help you stick to your financial goals.

This was a guest post by Peter Christopher, the finance blogger at Finance Care Guide.