How to improve your finances? Raise your standards gradually.

by Rob Bertman, CFA®, CFP® in Budgeting, Goals
April 15, 2022

How to improve your finances? Raise your standards gradually.

Why is it that we always end up with the same amount in our bank account at the end of the month?

Why do we slip back into credit card debt after getting out?

The simple answer? We get used to living that way.

Even though it stresses us out. Even though we want to improve our financial situation. Even though we know we should be doing better.

We still stay in the situation we’re in.

At some point, enough is enough, so we get motivated and take action to improve our situation.

So then we make progress!

We start to budget, keep an eye on our spending, & lower our expenses.

We’re able to finally save money, see our checking account rise and our debt go down.

and then…

It happens AGAIN. 

We revert back to what we’re used to.

Why does this keep happening? Are we destined to live in this cycle forever? 


Will we ever have enough money to build a cushion in our savings account, start contributing to our investment portfolio, and finally build wealth?

Will we ever reach financial independence?


We can break out and break through. Here’s why we get stuck and how to get out of it.

Why do our personal finances revert back?

The simple answer? We’ve settled for it.

Where you set your standards is where you’ll end up.

what is stopping you from improving your finances

This happens to me with my weight. If I say I don’t want to go above 185, then I do just enough to stay around there and I hover there.

But when I want to lose 10 pounds because 175 is a better weight for my body, I make progress then revert back up to 185.

Why? It’s because I’ve settled for 185 even though I’d rather be 175.

The same thing is true with your finances.

The reason we keep going back to where we started is because we haven’t been able to sustain a higher standard for ourselves.

Why do we keep going back there?

All or nothing thinking

If I want to lose weight, I have to give up ice cream, pizza, and cookies, start tracking my calories in great detail, working out 5 days a week, say no to friends who want to go out…

For some reason, we think change has to be an all-in thing. We have to change everything.

But implementing drastic change is unsustainable. We’re not built to change everything all at once and uproot our way of living.

The antidote: Small, incremental changes starting with what is the smallest step that will have the greatest impact.

We get comfortable where we are and avoid change.

Change is hard for most people. 

Sometimes absorbing the stress of our situation is better than facing the uncertainty of the changes we have to make.

I’ve gotten used to maintaining 185, and the thought of trying to lose 10 pounds and what I’d have to do and give up to get there seems worse than where I’m at now.

If you’re used to paycheck-to-paycheck spending, ending up with very little money in the bank, and carrying credit card balances, the sacrifices you feel you have to make and the things you need to give up can seem worse.

That’s not true of course, but perception can become reality.

Fear of missing out (FOMO)

What will we miss out on by making these changes?

Loss aversion is a real thing. We put more weight on what we could lose vs what we could gain by making changes.

I could make a list of the amazing financial benefits like being high interest debt free and having an emergency fund and the psychological benefits of financial stability and a clear financial picture.

But it’s hard when you juxtapose it against what you feel like you have to give up to get there especially if you feel like you have to give those things up for good.

We expect perfection. Slip ups are unacceptable

This was a real struggle for me

I used to feel like I had to have the perfect system and it would have to be flawlessly implemented with no room for error.

So what happens when we set our expectations there and have the tiniest of slip ups? The wheels fall off.

We feel like a failure. Like we’re no good and will never be good.

So we give up and fall back into our old routine.

Don’t worry about setting the perfect personal budget and getting in perfect financial health. Just make some progress.

Negative self-talk

We can be really critical of ourselves and doubt our ability to do great things.

I forget where I heard this, but we would never talk to a friend the way we talk to ourselves.

Cheer yourself on. Be a supportive friend to yourself. Believe in yourself.

Improve your finances with these 9 mindset shifts

So often we focus on the numbers, but if we make some changes to our expectations and process to make the change, it is more likely to stick.

Acclimate to new personal finance standards in baby steps

I worked with a client last year who was used to ending the month at $100 in the bank just before getting paid.

If we just looked at the numbers and said he should have $20,000 in savings accounts, that would have been incredibly intimidating.

This is where raising your standards slowly comes into play.

Rather than suggesting that we move right to a 3 month emergency fund, we started with making $1,000 the new $100 in his mind. “The comma” he called it.

Another client was spending $10,000 per month and used virtually nothing in savings but could live off of $500 for a week if things got tight.

I could have started by saying they needed to get to $30,000 in the bank, but I knew that wouldn’t help, so we started with a $5,000 benchmark, making that the new $0.

Think of your expectations like a thermostat. When it gets too hot, the air conditioner kicks on. When it gets too cold, the heat turns on. It will adjust to the temperature you set.

We all have a level of acceptable money in the bank. When it’s above that number, we spend more. When it’s below, we get super frugal.

So let’s acclimate to a new temperature with your personal finances one degree at a time.

Don’t jump from $0 to $10,000 in your checking account.. Step from $0 to $1,000 to $5,000 to $10,000.

Each time you step up, make that your new acceptable number.

raise your standards

For example, I used to weigh 200 and wanted to get down to 175. When I got down to 190, I told myself that I would never let myself get back to 195 EVER. 

Then I got down to 175 and I lowered that 195 acceptable number to 185 (which is where I am today).

Use this idea with credit card balances.

Don’t go from $10,000 to $0. Go from $10,000 to getting one card paid off completely. Then to $7,000, $5,000, $2,000, then to $0.

Once you get to $0 and build up a cash cushion, make $0 your new acceptable level.

Focus on the easy wins

Why do we feel like the first step to reduce our spending is to move, sell our car, take our kids out of school, never go out to eat, and give everything up.

That’s the all-or-none thinking I mentioned before.

Wouldn’t it be better to start with giving up the things you don’t care about and see how far it gets you?

So often, we feel like we have to give up what we enjoy, but there are plenty of layups we can make rather than having to make a full court shot.

Start with the things that are easy.

The way I look at this is what’s the easiest thing I can do that will have the greatest result?

For eating, the first thing I did was to stop eating after 8:30pm, not give up sweets, eat more healthy food, track my calories, or start an exercise regimen

How did I come up with that? Nothing good was eaten after that time, so if I just said, “Nope!” to eating at all, then that would be the best place to start.

Figure out the thing you do that you can easily do with your money and start there.

Progress not perfection

This is my new mantra.

Forget perfection. Just start moving in the right direction.

It’s better to do that than nothing at all.

This also includes giving yourself some grace if you make a mistake or slip up. It WILL happen.

It also helps to treat it like an experiment with you as the observer.

As you try new things, expect it not to fit right at first. But turn those things that aren’t working into learning experiences and figure out a better way for YOU.

You become a tailor. 

Try something on from the rack and it fits well enough, but needs to be taken in in some areas, let out in other areas shortened here, lengthened there.

After some iterations, it fits perfectly to YOU.

You’ll get there, but you first have to try something on.

Measure progress and don’t live in the gap

So often we look at the end goal without celebrating how far we’ve come from where we started.

That’s what living in the gap means. We stay focused on the gap of where we are vs where we want to be without recognizing the progress we made.

If you’ve paid off $2,000 of credit card debt and still have $8,000 to go, yes, stay focused on getting to $0, but think about how awesome it is that you’re down $2,000!

How will you know how far you’ve gotten? 

As Peter Drucker used to say, “What you measure gets managed.”

Measure your progress.

Break up the goal into smaller increments

This goes hand in hand with acclimating to new standards.

Break down a larger goal into smaller steps.

If it will take you a year to reach your financial goal, break it down into where you want to be in 6 months, in 90 days, this month.

break down financial goals

A year can seem like a long time and can be hard to stay focused. 

But when you think about what you can do this month or this week, that makes the decisions you make today matter more.

Future pacing

It can be hard to really feel like we can reach ambitious goals when we’re in our current circumstance.

Future pacing means bringing yourself out of where you are today and putting yourself in the future after achieving your goal.

What does that feel like? What would that reality look like? Does it get you excited?

Get out of today’s reality and put yourself into the mindset of after you cross the finish line.

It should energize you to take action. If it doesn’t then get more detailed and granular about the goal.

Remember that being uncomfortable is temporary

I recently tried snowboarding for the first time. Snowboarding just looks so cool and fun.

Everyone warned me that the first couple days are brutal on the body…and they were right.

It was honestly excruciating, because you can only fall 2 ways on a snowboard, flat on your face, or crushing your tailbone, back & head. I fell A LOT!

If I thought the first day was what every day was going to be, I would never have tried it.

But because I set my expectations (thanks to learning from others’ experience), I pushed through.

But by the 3rd day, I got the hang of it and it was actually fun.

The next time I get out there, it will get even better.

Starting something new is hard at first, and it’s common to feel like that’s how it will always feel.

But remember the discomfort is temporary and will be over after the first week or two. The benefits will start to kick in shortly after, then life will be better than ever.

Discomfort is temporary. Set that expectation as you start something new so it doesn’t derail you and that you make it past the hardest part.

Make a list of what has tripped you up and make a game plan to avoid it.

Things are going to come out of nowhere. There will always be unexpected expenses and events but many are in fact predictable. We just forget or don’t plan in advance.

So make a list of what is likely to happen that can get you off track.

Make a list of your irregular expenses, what you’ll do when your friends invite you out to an expensive dinner, etc.

Then make a game plan for what to do WHEN it happens. 

(By the way, it’s ok if one of your game plans is “Oh well.”)

Again, go easy on yourself but plan ahead.

Be ok with a little reversion

It’s inevitable that you’ll be drawn into your old patterns and circumstances even with the best planning.

Just make sure you’re setting higher lows for yourself as you strive for your financial goals.

I like to pick the mid-point between where I was and where I am now.

If you’re used to having $0 in your savings account and you get it up to $10,000, make $5,000 your new $0. 

Acclimate to higher standards along the way, inch by inch.

Top financial habits to improve your finances

Ok, so now that we’ve worked on the mindset side, let’s get you some real, tactical things you can do to support yourself along the way.

Track your spending

We can all name our monthly bills like our payment on the car loan, mortgage, and student loan payment.

But we tend to guess and be way off with the rest of the other spending.

One of the biggest mistakes I see is starting with a budget instead of knowing how much money you spend.

So, don’t start with a budget. First see how much you spend on all your expenses. 

Why is that important?

Well, setting a budget with numbers that have been pulled out of the air are doomed to fail. 

The goal is to gradually improve, so you want to know the actual numbers rather than your guess on how much you spend on a monthly basis.

Once we know the actual money being spent, then you can figure out the changes you need to make to improve your financial situation…gradually

Remember that we’re looking for incremental change, nothing drastic.

Track your spending and look at the ACTUAL numbers, then find the easy wins to lower your expenses without feeling like you have to sacrifice.

That’s the best way in personal finance to reach your financial goals.

Weekly spending review

Most people wait until the end of the month to see if they landed on target, then wonder why they never seem to make it.

Simple answer, by the end of the month, it’s too late to make adjustments.

But if you work on a 5 minute weekly spending review, you’ll have 4 opportunities to make adjustments so you end on target.

weekly spending review

But don’t spend more than 5 minutes. Just look at your total spending month-to-date.

50/50 Rule

Speaking of all-or-nothing thinking.

When new money comes into our life from a raise, bonus, gift, tax refund, we feel like we can do one of two things.

Spend all the money and fall prey to massive lifestyle inflation OR reach your savings goals, pay off debt with it, or increase your investments.

But the reality is that you can do both. 

That’s where the 50/50 Rule comes in.

Take at least half of new money and add it to what you’re currently doing to save, invest and pay off debt.

Take the rest of the money left over and feel free to spend it or increase your living expenses.

That way, you get the best of both.

(If you get a large windfall, then you’ll want to skew a lot more to the wealth building activities).

The number one predictor of your future net worth is your savings rate, how much money you have left over after the income that comes in and the expenses that flow out.

The 50/50 Rule will make sure you increase your savings rate even if you’re starting from scratch.

Reach your financial goals by raising your standards.

The key to personal finance doesn’t involve getting the perfect financial plan or getting a higher paying job.

That won’t solve your money problems.

Gaining control of and reaching financial security and abundance is all about managing money day-to-day while raising your expectations gradually.

If you need help figuring out how to step up your personal finance game, I’m here to help.

Or you can get my FREE GUIDE: 5 Steps to Cut Spending

5 steps to cut spending