Cheat Day Once in a While is Just Fine, whether it’s Dieting or Financial Planning!

Have you ever caught yourself reaching for a box of sweets after a tiring day or having an extra slice of cake on a special occasion? We’ve all been there and done that. But people trying to follow a strict diet may curse themselves for even having such thoughts. While it may not help their cause if it becomes a habit, the occasional indulgence should not make you feel guilty. It takes time, effort, and a little leeway to build discipline in any area of life, be it your diet, your well-being, or your financial goals.

Financial discipline is sticking to your spending, saving, and investing plans to achieve your monetary goals. It’s not easy to follow these plans flawlessly from day one. Financial discipline is built with small concrete steps over time and eventually becomes second nature to us. It is also important to reward yourself for a job well done - quite like the concept of a ‘cheat day’ in dieting. Every time you reach a certain financial milestone, you can go on a little spending spree or plan a relaxing weekend getaway. This will motivate you to reach the next milestone.

Like the sound of that? Here are some more tips to create and execute your financial goals.

Start by Setting Realistic Financial Goals

This is the first and most important tip. Be it money or calories, setting lofty goals at the beginning can get in the way of achieving your targets. For instance, a plan to drastically cut the intake of calories to achieve your weight goals can cause you to give up midway. Similarly, an extremely tight budget from day one can shake your resolve and may even result in unnecessary splurges.

Therefore, it is always advisable to start your financial journey by setting realistic goals. If you are a person who buys branded clothes every weekend, reduce it to once a month. If you are new to saving money, start by setting aside small amounts of your salary for a mutual fund or an SIP.

The point is to set a smaller target. Once you achieve it, you will be motivated and challenge yourself with bigger targets.

Committing to your plan and staying consistent

After setting financial goals, it is important to commit to them and stay consistent. Instead of making large investments, focus on making regular investments. One of the easiest ways to do is through a Systematic Investment Plan (SIP) in a Mutual Fund.

Most Mutual Funds allow a minimum SIP amount of ₹500. This enables you to start small, stay consistent and increase your investments over time. Also, SIP debits are automated, and in a way, they force you to stay committed to your long-term financial goals.

Consistency pays dividends in the long-term

If you start early and stay consistent, you can harness the power of compounding. This allows you to get more out of your investments and realise your financial goals with ease. Let’s look at how the power of compounding works through an example.

Say you invest ₹1,00,000 today, it will amount to ₹2,15,000 after 10 years at an assumed rate of return of 8% p.a. But if you had invested the same amount 10 years earlier, your corpus would have grown to over ₹4,60,000, assuming you do not make any withdrawals during the period. *

Therefore, financial goal management is not all hard work and discipline. If you start early, you can make your money work for you!

Reward yourself – Cheat Days are Just Fine!

Just as cheat days or treat days in a diet plan make people feel better and stay motivated, reward yourself when you reach milestones along your financial journey. Celebrate with a new pair of shoes or a weekend getaway. But do remember, people on a diet indulge in their favourite foods mindfully. Similarly, find ways to spend within your means.

Financial discipline is sticking to the plan, tweaking it as you progress and being nice to yourself. If you have stayed on course and achieved certain milestones, spoil yourself a little. Your mind will get used to being rewarded for hard work and you’ll find yourself motivated to attain your next financial goal.

Inspired to get your financial plans on track? The first step would be to start investing in Mutual Funds through Investment Services Account with HDFC Bank. Just login through your NetBanking, go to the Mutual Funds options, click on request, and open Mutual Funds ISA Account.

Click here to open your ISA today!

Read more on how to shield yourself from market volatility by clicking here.

*This is just an illustration with assumed rates to explain the power of compounding. Returns are neither indicative nor guaranteed. HDFC Bank is an AMFI registered Mutual Fund distributor. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.