Developing Self Discipline To Better Manage Your Finances


Without self-discipline, success is impossible, period.”  – Lou Holtz

Have you found yourself in a pattern of overspending which has led to a growing and out-of-control debt, along with little to no savings?

Do you set a budget every month, but never stick to it?

Are you in financial chaos, unsure of which bills are due when and how much you even owe?

The cause of each of these scenarios (and many others like them) is often due to a lack of self-discipline.

What is Self-discipline?

Self-discipline is the practice of resisting instant gratification in exchange for long-term success and fulfillment. Self-discipline is a lifestyle, and like anything worthwhile, it takes practice and it takes sacrifice, but the rewards are countless.

How Does Self Discipline Apply to Money Management

You’ve seen the show on lottery winners – instant millionaires one day, penniless the next. This is because the attraction of having the ability to purchase anything they wanted was too great to overcome. They never learned the skill of financial discipline, which is something that comes with practice, intent, and time. It’s a skill you need to learn if you want to become financially success. Because as you build your wealth, you want to keep it.

11 Tips to Develop Financial Discipline

Thankfully, financial self-discipline is a skillset that can be learned. Therefore you should make all efforts to consciously seek to learn this skill, similar to learning to speak another language or to drive a car.

Here are nine tips to develop the self-discipline required to better manage your finances.

1. Create a financial plan
How do you define your financial future as successful? Answer this question, then build a plan to make it a reality. Start by developing a set of goals to move you closer to your vision.  Then implement day-to-day practices that will lead you to attain those goals.

Our days are filled with decisions. Consistently, you’re faced with opportunities to be led away from your financial plan. As you are faced with each of these decisions, consider which choice aligns with your financial plan. Consciously make that choice. Over time, you’ll find that making the choice that’s aligned with your goals becomes an automatic reaction.

One right choice after another. One small step at a time.

2. Find your motivation
If you don’t know why you’re chasing something, you’ll eventually stop running. Because what’s the point? Dig deep and understand why financial success is important to you. Is it because you want the freedom to leave your day job? Do you want to leave your family with a large inheritance? Maybe you want to travel the world for a year.

Find your motivation and use it to resist the temptation to overspend.

3. Reward yourself
Create a list of small and large rewards. Anything from a venti double pump latte, to a pair of shoes you’ve been eyeing, to a weekend get-a-way. Then, as you achieve pre-defined milestones, grant yourself a wish from your list. Earning rewards creates a habit loop that will encourage you to continue making the right choices.

For example, you declined an invitation to an expensive meal with a friend because it wasn’t in your budget. Go grab yourself that latte. When you’ve paid off your car, reward yourself with a short trip out of town.

4. Set a realistic budget and stick to it
Spend your money with intention. The best way to do this is to create a budget and identify in advance where you will spend your dollars. Set your budget at the beginning of every month, depending on your pay cycle.

You are more likely to stick to a budget if it’s realistic. For example, if you currently spend $800 a month on food because you eat out five nights a week, setting a $150 a month food budget is setting yourself up for failure. Instead, reduce you’re restaurant budget by a couple of nights a week at first, then work towards more lofty goals.

Check your bank account daily. Knowing how your actual spending is stacking up to your budget daily will help keep your overspending in check. Likewise, talk about your budget with your spouse, your friends, your family. What’s out of sight is out of mind, so keep your finances front and center as a reminder of the goals you are working towards.

5. Improve your financial literacy
The more you know, the more you grow. Make it a practice to read financial blogs, books about budgeting and making money, and enroll in financial classes and webinars that are offered free online.

Money is a broad topic. Any search on Pinterest or Google will validate the vast amount of financial topics that are available. Pick something that interests you, learn as much as you can, and apply it to your life as much as possible. Even better, take your new education and teach it to others. Many entrepreneurs started simply because they did research and learned about a topic that interested them.  Then taught it to others for a profit.

Here are some good resources to start with:

The Dallas Fed’s Toolkit For Building Wealth

SmartAsset’s Investment Calculator

Kiplinger’s Wealth Creation Channel

6. Hang around financially successful people
The people you spend your time with have a direct impact on your behavior. For instance, if your friends are living above their means by eating out at expensive restaurants, buying the latest iPhone, or leasing expensive cars, you will too.

Start networking with those who you look up to financially. Learn their habits and adopt them.

7. Track your financial metrics
What can be measured can be improved. Key performance indicators (KPI), as they’re called in the corporate finance world, are a way to measure success. They also serve as great motivators to continue performing well, or to course correct when you’re not making wise financial choices.

Financial metrics you should calculate and track monthly include your net worth, total savings, total debt, and your debt to equity ratio. Plug them into a spreadsheet and when you sit down to create your monthly budget, update your metrics. In addition, if spreadsheets don’t appeal to you, you can use a simple notebook, or a chart you can color in – be creative.

8. Know what your triggers are and avoid them
Understand what triggers you to overspend, then avoid those triggers at all costs.  This is a huge step in the right direction towards financial discipline. Why resist temptation if you’re never faced with it to start with? Find out what your triggers are, and set up a new routine that leads to success.

For example, if you consistently purchase things because you received a BOGO promo code, unsubscribe from emails. Alternatively, if advertisements on social media are your downfall, delete Instagram from your phone. If going to Target for one item leads to an entire cart full of unplanned purchases, order it online and have it delivered.

9. Avoid debt wherever possible

When it comes to buying a home, or running a business, debt can be near-impossible to avoid. In pretty much all other cases, though, it is just uncomfortable. Get a little uncomfortable, and pay cash for everything you can. Don’t buy new cars unless you can afford it in cash, bargain shop on private seller sites instead. If you open credit cards, use no more than 10% of your limit at a time, and pay it off immediately. Don’t lean on debt to get nicer things, it will only leave you payment-rich and cash-poor in the end.

10. Don’t shy away from extra work

Sometimes life hits you hard, and in response, you’ve got to pull some extra hours. Maybe you have gotten buried in sudden medical debt, and as a result you have to take an extra job. Understand that hard work now will lead to prosperity later, and don’t rob your future self to ensure your current self can rest for a minute.

11. Stay positive and ditch the shame
Lastly, financial self-discipline is a lifestyle. It’s a valuable skill that is worth learning. It takes time and it’s hard. In addition, you’ll fail along the way. However, when you do, don’t shame yourself for your mistakes. Stay positive, learn from them, and re-commit to doing better.

Do you have any tips that have been helpful to develop your self-discipline around money? Share them in the comments below.

Read More:

7 Self-Discipline Hacks That Will Prepare You To Succeed

How to Create a Financial Plan in 4 Easy Steps

Creating A Budget You Can Stick To In 3 Easy Steps