“I want a buffer of three months’ salary.” It is a sensible goal, but if you have little in savings today, it feels like a mountain with no summit. Every month you put something aside, and every month the gap to your goal seems just as big. After a few months, the thought creeps in: I’ll never manage this anyway. And then you stop.
The problem is rarely the goal itself. It is the distance between where you are and where you want to go, with no stops along the way to notice that you are making progress. In this article you will read why small wins are so powerful, what the research says about them, and how to build them deliberately into your financial plans.
The power of small wins
In 1984 the organisational psychologist Karl Weick wrote an influential article on “small wins”. His point: big social problems seem so overwhelming that people become paralysed. If you break a big problem down into concrete, achievable pieces, you get results that are visible, and those results make the next step easier.
Teresa Amabile and Steven Kramer (The Progress Principle, 2011) found something similar at work. They analysed nearly 12,000 diary entries from 238 employees. Of everything that could make a working day a good one, one factor stood out: the feeling of making progress in meaningful work, even when that progress was small. On days with such a small step forward, people were more motivated and more positive.
Why success feeds your self-confidence
The psychologist Albert Bandura (1977) introduced the concept of self-efficacy: your confidence that you can do something. According to Bandura, the strongest source of it is not a pep talk or an inspiring book, but the experience of having already succeeded. Every small win is such an experience. It tells you: I can do this. And anyone who believes they can do something takes the next step more easily and gives up less quickly when setbacks come.
That is also why the title speaks of “feeding” willpower. Whether or not willpower is a limited supply is something researchers still disagree on. But it is clear that motivation and self-confidence grow when you see results. Small goals make results visible sooner.
What this means for your money
You see this in financial research too. Ran Kivetz, Oleg Urminsky and Yuhuang Zheng (2006) studied customers with a loyalty card for a free coffee. The closer they got to the free coffee, the sooner they bought their next one. This “goal-gradient effect” means we push harder as the finish line feels closer. A short intermediate goal quickly brings that finish line within reach.
David Gal and Blakeley McShane (2012) studied people with several debts. Those who managed to pay off a few smaller debts in full were more likely to eventually clear all their debts. That ties in with the “snowball method”: paying off the smallest debt first, for the sense of progress. Financially, it is not always the cheapest order, because paying off a high-interest debt first usually saves more. Which approach works best for you depends on your situation, and a coach can help you weigh it up.
Ayelet Fishbach and Ravi Dhar (2005) found that progress sometimes works as a licence: “I’ve saved well, so now I can treat myself”. A small reward is fine, but link each intermediate goal straight away to the next one. That way a win becomes a stepping stone, not an end point.
An example: Elke and her first 250 euros
Elke (29) works as an office employee in Hasselt and lives alone. When her washing machine broke down, she had to borrow the money from her sister. She decided to build up a buffer, but the amount she had in mind felt out of reach.
Together with a coach, she broke the big goal down. Her first intermediate goal: 250 euros, enough for a small repair. She set up a standing order of 50 euros for the day after payday and stuck a strip of paper with five boxes on her fridge. Every month she coloured one in. After five months there were 250 euros, and she noticed she felt proud. The next intermediate goal became 500 euros, then one month of fixed costs.
When she received her holiday pay in the summer, she immediately set part of it aside. “In the past I would have thought: that won’t make any difference to such a large amount,” she says. “Now I saw it as three boxes at once.”
How to set your own mini-goals
- Start with your big goal. Write down what you ultimately want to achieve, and why. The “why” keeps you going when things get difficult.
- Choose a first intermediate goal you can reach within three months. Concrete and measurable, as Edwin Locke and Gary Latham (2002) recommend in their research on goal setting: not “save more”, but “250 euros by the end of October”.
- Make your progress visible. A strip with boxes, a small chart or a savings pot in your banking app with a name and a target amount.
- Celebrate each milestone, in a small and affordable way. Taking a moment to acknowledge what you have achieved strengthens the feeling that you can do it.
- Set the next intermediate goal straight away. That keeps the momentum going.
With the tool A goal you can reach (SMART), you turn a vague intention into a goal with a measure, a deadline and a first step.
Small steps, more peace of mind
Financial well-being is not only about the amount in your account, but also about the feeling that you have a grip on your situation. Every small win feeds that feeling. It shows you that you are not powerless in the face of your finances, but are changing something about them step by step. That experience of control is a form of financial self-care: it eases the tension, long before you reach your big goal.
Would you like to break your big goal down into achievable steps together with someone, and adjust course along the way when life gets in the way? A budget or financial well-being coach can guide you through it. Read more about coaching at FWBA.