DISCIPLINE:
A Necessary Skill for Financial Success

Discipline is a necessary skill for proper financial management.  Without it you will never acquire or accumulate anything.  Without it you will never accomplish anything.  Discipline is being able to say no when you need to and to be able to put money away instead of spending it.  It is being able to do the things you don’t want to do when you know you must.  It is forcing yourself to do the things that are necessary in both your financial life and your non-financial life.

Discipline is a skill that gets better with practice.  That means that if you can just begin applying it in one area of your life soon what you learn will transfer to other areas of your life.  And when you are able to apply discipline to any area of your life the results will dramatically improve.

Financially, discipline is about controlling your spending and making sure you pay for the things that need to be paid.  The hardest part for most people is controlling their spending.  If you cannot control your spending then no matter how much money you make it will never be enough.  Our wants will always be able to expend whatever income we can acquire.  Thus, controlling spending is a necessity for everyone.  It is being able to say no to purchases you normally make on a whim.  These impulse purchases are the primary contributors to people not following their budget.  You can make a budgetary amount to account for impulse purchases but then make sure you do not go over that amount on a monthly basis.

Those who do not have a natural amount of discipline must acquire it the hard way.  Acquiring it comes from learning to practice it in small amounts.  Start by simply trying to follow your budget.  Once you can do this then the next step is to be able to save money.  Saving money requires you say no to yourself when you have the urge to spend it.   We often think we “must” when in truth there is no urgency other than that which we have created in our mind to justify something.

One important thing to consider is that discipline is a skill and can be learned just like anything else.   Another corollary to this is that spending is a habit too.  Thus a key part of financial success is learning the skill of discipline and breaking the habit of spending.  When you are able to accomplish both of these objectives then you will be well on your way to financial solvency and a well-managed portfolio.  So how does one go about learning these skills?   You simply learn by trying but there are tricks, which can help you along the way.  Below are two, which you might find helpful:

Use Rewards and Punishments
Rewards and punishments are the best way to learn a new skill and acquire it as a habit.  Perhaps you allow yourself a $200 personal spending spree if you maintain your budget for two months.  Or perhaps you force yourself to forego some pleasurable activity when you find yourself going over budget.

Accountability
One of the most beneficial aspects of having a financial advisor is the fact that you are in some manner accountable to them.  The simple human desire to appear competent to someone else is often enough to curtail your spending when you know you meet with your financial advisor to go over your portfolio.   However, a financial advisor is not the only way to be accountable.  A spouse or a friend can serve the same purpose.  The bottom line is that accountability always helps to break bad habits and accumulate new ones.

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