We all want to improve our finances and if we look deep down inside, we must accept that we are where we are because of our behaviours. Fortunately for you and me, we are not stuck with our behaviours; we can do better. Discipline with your finances is key to this and we should all aspire to improved financial discipline. Discipline is the act of making sure we do what we are supposed to do to achieve our goals. Easier said than done, right? How do we go about building financial discipline in ourselves to manage our finances better? Here are the five fundamental steps.
find your motivation
Building discipline is not easy work. There will be ups and there certainly will be downs. What keeps you focused through the ups and downs? Your motivation. Your “why”! Yes, its all well and good having more money but what for? What would you do with more money? What areas of your life would you focus on with more money? What would you do to make you feel you have more money? I mean, besides seeing more money in the bank. Be crystal clear about it. Do you want to travel more? Reduce your debt? Improve your home? Invest for the future? A clear goal helps us stay focused.
Improve your Financial literacy
Don’t kid yourself! You cannot get better at managing finances if you don’t understand finances better. You need to become interested and engrossed in matters of personal finance. You’re already reading this, so you have made a good start. We are blessed to live in a time when there are so many ways to learn. Buy personal finance books, sign up for that newsletter, subscribe to personal finance podcasts and make learning about your finances a part of your life. There’s no such thing as too much; learning one new thing is one more than you knew yesterday. Hearing something you already know is a reinforcement of the idea in your mind.
Observe your ways
This is where it gets hairy for a lot of people when we work with them on personal finances. While getting your finances together right away would be a great goal, it skips a very important step; you have to understand who you’re dealing with. A lot of people know that they overspend; some even know what they overspend on. Understanding the patterns and establishing why is what many people don’t know. Perhaps you overspend to keep up with the Jones’ so you don’t feel insecure. Perhaps you don’t want people to think (or know) that you can’t afford certain things. The reason lives within you. What you want to do is start tracking your money and how you use it. You have so many options in today’s world, including mobile apps which go with you wherever you go so you can track the expenses as they occur (this is the best). I started with an A7 notebook and eventually graduated to a mobile app. The point is to get to know yourself financially, of course. With tracking information, you can understand your money personality and the reasons behind it.
Change your ways
The hard part is making the changes you need to make. That is, after all, what discipline is all about. One of the best I ever did was write myself a letter when I was at a financial low point. I’m sure I’m not the only one who knows exactly what to do with money when they don’t have it. I broke the cycle by writing myself a painfully detailed letter on what to do when I came by money again. I only needed to do this once! It was largely thanks to the detailed information I had collected through tracking and the understanding I had of myself that I managed to speak to myself in a way I understood. Motivation tells you what you want to do, financial literacy shows you how to get there, tracking tells you what you are doing and this part is about telling yourself what you should be doing.
Work on habits/behaviours
Goals are great because they give us long-term targets. However, we live life in the short term and our behaviours occur on a frequent basis, daily for most. A behaviour repeated is a habit. That goes for both good and bad ones. What you want to do is focus on building habits. This is not easy. If you really take the time to understand yourself, you will have an idea of where your habits come from, and the stimuli. Creating new and better habits is what gets us through the days, weeks, months and even years between us and our ultimate financial goals. Make it a goal to read James Clear’s Atomic Habits; this book will give you an excellent understanding of habits in your life.
Building discipline is an everyday thing. If you want to improve your finances, then you should work on building discipline daily. Sporadic attempts to get better at your finances will yield little. Fortunately, you don’t need hours a day, just 15 to 30 minutes and you can split this into two sessions. A morning session where you learn something about finances and an evening session where you review your day from a financial perspective. Want to learn more about managing your personal finances? What would you like to read more about here on Blogchain with me?