2020 was a challenging year for many Americans. More than 11 million people collected unemployment benefits, and several small businesses struggled to stay afloat. However, even in these uncertain financial times, you can still take proactive steps to reach your financial goals. If pursuing your financial goals feels too difficult or demanding, you’re not alone. One way to stay on track with your finances is to have a financial accountability partner, otherwise known as a “money buddy.”

You and your money buddy can share setbacks, challenges, progress and achievements. By sharing your financial journey with a financial accountability partner, you will have the support to overcome obstacles and accomplish your goals.

What is a money buddy/financial accountability partner?

A money buddy does for your finances what a workout buddy can do for your physical health. You can structure your money buddy arrangement in a couple of different ways. It can be a one-way relationship, where you are accountable to your money buddy, or you can set it up where you are accountable to each other and each have your own financial goals.

When working together, each of you can set and share your financial goals and help each other make incremental progress—similar to how a workout buddy can help you stick to your nutrition and fitness plan. A money buddy isn’t someone who can “bail you out” of a financial jam; they are the mental and emotional coach for your financial health. Setting check-in times with your financial accountability partner can help each of you establish small term goals and stick to them.

For example, “I want to spend less and build my emergency savings” is an admirable long-term goal. However, saving an additional $40 a month to contribute to this fund may be tough to stick to as life happens. To make saving a long-term habit, you may commit to cutting your takeout budget or choosing to make your morning coffee at home rather than ordering one from a local coffee shop. Establishing this habit will allow you to adjust your budget for additional savings, and you can discuss your progress with your money buddy. Being accountable to someone can boost your willpower to say no to impulse purchases or skipping your savings deposit for a month.

Is a money buddy right for you?

If you’ve ever fallen short of a goal, you know how frustrating it can be. Even short-term obstacles or speed bumps have the potential to become long-term setbacks. If you slip up and buy a cup of coffee or order takeout after a tough day, are you likely to get back on track on your own? Or are you more likely to rationalize your decision and adopt your old habits? A money buddy can help you make it through when it doesn’t seem that your financial goal is attainable, or if short term gratification becomes too tempting.

People like to envision their journey as a smooth trip from day one to their end goal. When something happens to trip up that vision, a money buddy can be the difference. Sharing your struggles with your financial accountability partner provides an opportunity for you to share the burden. Talking about your progress works for your accomplishments as well. Maybe you finally save more than you ever have before—but you start comparing your progress to your family, friends, or acquaintances on social media. If you fall into the trap of comparing yourself to others, you may doubt the significance of your progress. A money buddy is there to help you stay focused on evaluating your progress in achieving your goals and celebrating that success along the way.

Discussing your struggles and getting positive support from a money buddy may help ensure that a minor slip-up or undue comparisons don’t detract from achieving your financial goal.

How to choose a money buddy

Find a money buddy whom you trust and respect, and who is willing to stand up to you if you waver in working toward your financial goals. Ideally, you’ll choose someone who will tell you what you need to hear, not just what you want to hear—and can deliver the message in a way you’re willing to accept. Someone who will be even-handed with any necessary support, while also taking a hard line if you attempt to deter from your goals. This person could be a mentor, a trusted friend, or even a family member but should not share any of your financial obligations. By utilizing the support of someone who doesn’t share your financial responsibility, you can be confident that their guidance helps keep you on track with your goals rather than their own.

Carefully selecting your money buddy can help you create an environment free of judgment and motive. The safety you feel in discussing your finances is key to ensuring you can progress along your financial journey.

How much financial transparency to have with your money buddy

You don’t necessarily need to share all of your financial information with your money buddy, but they do need to know about anything that relates to your goals. For example, suppose you are building your emergency savings. In that case, you don’t need to tell your money buddy your household income or overall debt picture unless you find that it’s directly related to your goal.

How often should you check in and discuss finances?

To start, consider checking in with your money buddy every other week or begin by discussing your plan each payday to make sure that your paycheck goes toward reaching your financial goals instead of an impulse buy. Frequent check-ins early on can help ensure that you stay on the right track with your goals. Once you’re comfortable, you can switch to monthly or quarterly check-ins.

How to set your goals

Everyone has goals. The difference is whether you take the necessary steps to achieve them, or simply hope they’ll happen and things will “work out” for you. “I’m going to save for an emergency” is a great goal that many Americans share. This goal takes into account what you need to do to achieve a certain outcome. But it’s not a SMART goal. To be a SMART goal, you need some additional info. SMART is an acronym to help you remember what you need to know to make your goals: specific, measurable, achievable, relevant, and time-bound. How could our “save for an emergency” goal improve? Consider:

• (S) – Specific: My partner and I want to build an emergency fund to cover up to three months of our expenses to better protect our financial security.
• (M) – Measurable: We would like to grow our $1,500 in savings to $18,250.
• (A) – Achievable: By cutting unnecessary expenses and contributing some of our discretionary income, we will increase our monthly savings from $50 to $300 per month and contribute a portion of our tax returns each year to save a total of $6,000 per year.
• (R) – Relevant: Being better prepared for an emergency will put us in a good position to have financial freedom and pursue new career opportunities while growing our family.
• (T) – Time-bound: This month, we’ll cancel our unused subscriptions and set an entertainment and takeout budget to save an additional $250 per month. In the first three months, we’ll evaluate our spending and savings habits and determine if we’re on track with our plan and whether or not we can increase our monthly savings. Right now we use our tax returns every year to fund an out-of-town summer vacation—for the next three years, we’ll staycation and visit local attractions. We’ll achieve our emergency savings goal in three years.

By creating SMART goals, you will be better prepared to make incremental progress. The more specific you can get, the better—including exact dollar amounts and specific timeframes. Adding specifics and milestones will help you and your accountability partner stay focused. If you are less familiar with goal setting or if setting a long-term goal feels daunting, consider using the above framework for something smaller that you can achieve in a matter of weeks or months, rather than years.

Hold each other accountable

Achieving short-and long-term goals can be challenging—but you don’t have to face it alone. Everyone struggles with financial challenges or with staying motivated. With a money buddy, you can help keep each other accountable by sharing your experiences. It’s not always going to be easy, but don’t forget that reaching your goals can be both rewarding and fun. To help stay motivated, consider setting rewards at milestones—giving yourself rewards can give you something to look forward to and ensure a positive experience.

Working with a money buddy is a great way to turn your financial dreams into reality. Take the time to find someone whom you can trust and who won’t be shy about holding you to your financial plan. If you’re looking for more ideas on improving your personal finances, explore our financial literacy courses.