“Discipline is the bridge between goals and accomplishment.” – Jim Rohn.
We all set financial goals at some point in our lives. But are we always able to accomplish these goals?
Financial discipline is one very important aspect of personal finance that plays a vital role in securing your financial future. Self-discipline is a skill that can be learned and turned into a habit and so is the case with financial discipline.
Whether you are just starting out on your financial journey or looking to improve your existing habits, this article will provide you with practical tips, tools, and insights to help you develop and maintain a disciplined approach to your finances.
What is financial discipline?
Financial discipline is the practice of setting specific financial goals for saving and spending and sticking to your word as you work towards achieving these goals.
Once you have established financial discipline as a habit, you can then move forward towards achieving financial independence.
Financial independence refers to being able to support yourself financially without relying on others. This state of financial security allows you to make decisions based on your long-term goals and needs, rather than being limited by your current financial situation. It also provides a sense of flexibility and stability in managing one’s finances.
So what are some of the steps you can take to achieve financial discipline?
5 Steps To Mastering Financial Discipline
- Get clear on your financial goals.
You can’t start your journey on financial discipline without having clear goals. Start by listing down your short-term, and long-term financial goals.
Some short-term goals you can set are; open an MMF to start an emergency fund, create a budget, track your finances daily, put aside a certain amount this month etc.
Some long-term goals you can set are; start saving for retirement, setting aside money for your children’s college, investing in stocks for future returns, etc.
Having a clear understanding of what you are working towards will help you stay motivated and keep you alert as you spend money.
- Creating a budget.
A budget is a critical tool for achieving financial discipline. It is a spending plan that should include all your needs, wants, savings, investments and debt repayments, if any.
Seeing and observing your spending habits regularly can help you gain a better understanding of your overall financial situation. You can choose to create your budget in many different ways. It could be on paper, on a spreadsheet or on a software.
This will help you track your spending and identify areas where you can cut back and adjust your spending accordingly.
- Avoid impulse purchases.
Impulse purchases can quickly derail your financial discipline.
To avoid impulse buying, create a list of things you need before you go shopping, and stick to it. This is where you have to exercise self-discipline.
Additionally, always take some time to think about a purchase before making it, especially if it’s an expensive item. After giving it time you may realize that you don’t quite need it. I personally use a 3-day rule. When I want something so badly, I add it to cart but wait for another 48-72 hours to see if I will still feel the need for that thing as urgently as I initially felt it. Most times, I end up eve forgetting that I had that thing in my wish-list. There is a reason why they call it “impulse buying”. The feeling comes and goes soon thereafter. If you give it time, you might not end up buying something you will regret later.
And there is absolutely nothing that can’t show up on this list. Whether it is that Hermes handbag you have always wanted, or the trip, the new phone or whatever experience or purchase gives you joy… all of that should show up on your list. There is absolutely nothing wrong with luxury spending. There is just something wrong with unplanned for luxury purchases. Especially of they end up eating into other important financial goals like your savings or debt freedom.
- Automate your savings.
Automating your savings is literally putting your finances on autopilot. This way, you don’t have to think about savings or have a debate with yourself whether you should save or not.
If you struggle with being disciplined with your savings, you need to authorize automatic transfers from your current account to your savings account. Your bank can set this to happen on a specific date of the month when you receive your income.
- Create a sinking fund
A sinking fund is a savings account set aside for a specific goal, such as a large purchase or to pay off debt.
By regularly contributing to the sinking fund, you can build up the necessary funds over time and avoid taking on debt or having to make sudden, large payments.
This disciplined approach to saving helps you to be proactive and plan for the future.
By creating a sinking fund, you can exercise financial discipline, stay on track towards your goals, and ultimately improve your financial security.
Find out more on how to achieve your goals using sinking funds.
6. Make it an emotional priority
Financial discipline has everything to do with our emotional and mental relationship to money. If you make it a priority to embrace the discomfort that comes with practicing financial discipline and see the eternal value of it, the process gets easier. Don’t wait for the perfect income either. Because the truth is that how you behave with 50k is exactly how you will behave with 200k. Our money behavior does not just change miraculously when we start making more money. A lack of prioritizing making good financial decisions cuts accross, whether we have money or not.
Read a personal finance books to elevate your financial literacy, work with a personal finance coach and put yourself in spaces where money is discussed positively. The more you feed on good and positive vibes when it comes to money matters, the better your money mindset and relationship will get.
Achieving financial discipline requires effort and commitment. However, by setting clear financial goals, creating a budget, avoiding impulse purchases, automating your savings, and creating a sinking fund, you can take control of your finances and stop struggling with financial discipline.
I don’t know how to explain how much this comes in handy at this moment of my life. But just understand that it’s so timely. I keep learning everyday from you coach.
Great thankyou Couch Susan. This year my finances are taking shape