Each year, countless people make the commitment to cut down on spending, get out of debt, and save money for a better future. Yet just like what happens to similar pledges to observe a healthy diet or hit the gym regularly, these well-intentioned plans can often fail due to a lack of self-control. Strong financial discipline not only ensures long-term success; it lets you further streamline and optimize the big money decisions. For instance, most people buying a home would take on the longest loan term available. But with discipline, you can talk to your mortgage lender and get a shorter term and wind up paying far less in interest over the years. Here are some steps to take to cultivate this essential quality.
Create a detailed plan
Once they start earning a living, most people do have some sort of plan for their finances; the trouble many face is that the path to their objectives isn’t clear. Some might dream of retiring at 40 to travel the world or settle down, but that won’t happen without a thorough awareness and mastery of current income and expenses. A few wage earners simply live paycheck to paycheck and don’t even keep a rudimentary budget. Given such practices, it’s not surprising many eventually wind up growing debt instead of wealth.
Financial discipline goes hand in hand with a clear path to your goals. Be detailed in tracking where your money goes; set specific targets for how much money you’ll save every month and what areas of spending can be trimmed or eliminated. Practice revisiting your plan each month to review how well you’ve managed and continue to make adjustments.
Work around major obstacles
The word “discipline'” invariably connotes a degree of hardship. It’s difficult to be the master of your finances. Adults who seek to become more disciplined when it comes to money will encounter many obstacles and engage in a constant battle to maintain self-control while inundated with temptations to spend. If you want to achieve discipline without exhausting your reserves of willpower, you can make matters easier by identifying the biggest roadblocks you face each day and removing or avoiding them. You can unsubscribe from retail mailing lists, leave your credit cards at home, or take a detour away from that shopping mall you pass by on your daily route. With these challenges out of the way, it will be an easier task for you to develop discipline and control your cash flow.
Hack your micro-habits
Most people have an idea of what sound financial practices look like—set aside money each month for emergencies, invest, and spend only on what you need. In practice, our habits are what make us succeed or fail in implementing these measures. We all develop good and bad habits throughout our lives, but not everyone deliberately cultivates their habits with a specific purpose in mind. Hacking your micro-habits is one of the most powerful ways of accelerating through the curve of mastering the financial discipline. A small step, such as setting aside half an hour each day to read a book or listen to a self-improvement podcast, can seem insignificant on its own but is actually the building block of greater positive habit formation.
Doing the right thing with your money usually isn’t about a lack of knowledge but rather of poor self-control leading to bad practices. With these steps, you’ll be able to build discipline and properly steer your finances in the right direction.