Making the right decisions when it comes to your money can be tough. I mean, you’ve worked hard to earn it, so you can spend it on what you want when you want, right?
Technically, yes…buuuut that doesn’t necessarily mean you should.
This is where discipline comes into play.
Discipline means being able to say no when you don’t feel like it and choosing to save when you want to spend.
Not always the easiest thing to do, I know!
Fortunately, becoming more disciplined with your money can be achieved with education, training, self-control and regimen. Let’s dig into each facet and see how they factor into our financial lives.
Education
Most consumers have received little (if any) formal training on the ins and outs of managing their finances. Sadly, this lack of knowledge is the culprit for much of the high debt and insufficient savings issues that plague many Americans.
Discipline requires education, that’s why I can’t emphasize enough the importance of financial literacy.
That withstanding, education is a lifelong journey and you don’t have to know everything about money from the get-go. In fact, just learning the basics and sticking to those principles should yield immediate positive results and help you develop more discipline around your money.
Here are a few resources that I recommend to get started:
- Investopedia and Vanguard – For General Investment Knowledge
- Dave Ramsey – Budgeting and Debt Repayment
- IRS – Tax information
Training
In a perfect world, we would all do the right thing all the time. We would eat right and exercise. We would change the oil in our car at regular intervals. And without question, we would have an emergency fund, max out our retirement accounts, and have zero debt.
But we don’t live in a perfect world, and while we can certainly accomplish everything listed above, doing so requires work.
Think about it this way, when you want to get fit — whether it’s physically or financially — do you just read about what you need to do and POOF! you’re magically transformed into a ripped, money managing machine?
Of course not!
To get results, you have to train.
While educating yourself is certainly important, training differs in that it is the transfer of knowledge into skill. For example, knowing that you need to save versus setting up a savings account and having automatic transfers deposited into it are very different.
This is key because, without action, the best intentions in the world are nothing more than that: Intentions.
Along those same lines, if your goal is to become more disciplined around budgeting, you could read about what you should do, but don’t expect to see significant changes until you begin to DO the work of tracking expenses and balancing your accounts.
Self-Control
A big part of prudent money management has to do with exerting willpower and self-control over our financial decisions. The challenge is, willpower operates much like a muscle that can become tired and lose strength over time.
Fortunately, research shows that certain strategies can help build up our “self-control muscles” around spending and saving money.
Here are a few that you can begin implementing immediately:
- Space out your financial decisions: When people are faced with multiple decisions that test willpower, research suggests that willpower can easily be depleted.
- Track your spending: Rather than try to keep mental notes of how much money you’re spending, actually write out a daily list of how you spend your money.
- Set up automated transfers: Setting your savings on autopilot will prevent you from devoting your limited willpower resources to deciding between saving or spending money.
- Stay away from temptation: Avoid opportunities for impulse spending by staying away from places that you know are triggers to overspending.
- Find Support: Find a person (or group of people) that you trust who will be supportive and hold you accountable when necessary.
Regimen
It sounds counterintuitive, but having rules is actually freeing — especially as it relates to your money.
By establishing rules around your spending, you eliminate (most) decision making and allow yourself the ability to spend on the things that matter most.
One such way to do this is by creating a regimen.
Regimen implies regular and consistent action, for example — bi-weekly contributions to your retirement. The great thing about creating a regimen is if you can just begin applying it in one area of your life you will notice that discipline start to spill over into other areas.
Accountability
In closing, there’s an old African proverb that says: If you want to go fast, go alone. If you want to go far, go together. As a financial advisor, my goal is to partner with my clients to help them reach their full (financial) potential. For some, it’s assistance with creating a budget and the encouragement to stick to it. For others, it’s outlining an investment strategy and the reassurance to stay the course even when markets are volatile.
No matter the individual goal, my job remains to act as their partner — holding them accountable and making sure that their goals and actions align.
Pathfinder Planning LLC provides personal financial planning advice and asset management for a simple fee to young adults and working families in North and South Carolina through group classes, one-on-one planning, and ongoing advice.
Your Financial Mom blog posts are not meant to be legal, accounting or other professional service advice. Content represents the opinion of the author only. Pathfinder Planning LLC is not responsible for the accuracy or validity of content contained in third-party comments.