Lack of financial discipline can harm you in the long run. If you want to discipline your finances, here are 13 effective tips to help you achieve financial freedom.
Perhaps your New Year’s Resolution is to be financially stable and afford the lifestyle you want. Moreover, you want to start saving for retirement or keep your credit card balances to a minimum.
While the idea is brilliant, keeping your financial resolutions on track is no child’s play. You need to change your spending habits to achieve your deepest goals and achieve financial freedom.
But before you can reach financial freedom, it is crucial to master the basics of financial discipline. To put you on the right track, I have compiled 13 effective tips for practicing financial discipline to spur a change in your life.
Table of Contents
What is Financial Discipline?
The millennials seemed to have a mindset of owning everything that they could not get growing up. Our generation overextended this idea on their finances.
Today, most people tend to cover their early financial deficiencies by overspending. It’s not about owning what they don’t have, but to blow every last penny on their daily wants.
A simple definition of financial discipline is to control your money and avoid impulsive spending. It ensures that you don’t end up with an empty wallet before paying your bills.
While it’s easy to swipe your credit cards every day, you can end up in a puddle of debt very quickly. The only way to avoid that is to stop spending when you need to stop.
Practicing Financial Discipline
To help you understand what it means to practice financial discipline, here’s a common example.
Remember when you were growing up, the adults around you emphasized living with discipline? They made you follow waking up and bedtime schedules or maybe bought you a money bank to save up.
All these little habits helped instill discipline in our minds. As we grew up, most of us decided to choose discipline only at times of convenience.
Whether you still own a money bank or not, it’s always beneficial to practice discipline with your finances and save up.
Believe me when I say, living from paycheck to paycheck is not directly connected with your monthly income. There are so many people with high income who live that way.
Because they don’t know how to manage their money efficiently. And no, you won’t find treasures of Narnia in their cupboards either.
Overspenders put unnecessary items in their cart, make impulsive purchases, and always spend a little more than they need to.
Practicing financial discipline means being mindful while spending, saving up for purchases that will make a difference, and working towards the ultimate aim of reaching financial freedom.
13 Ways to Practice Financial Discipline
If you want to have better chances of achieving your financial targets and fulfilling worthy goals, you have to seal the money drain that sucks up all your cash as soon as it comes.
Here are 13 ways to stay disciplined with your money and set your priorities straight again.
1. Be Realistic
Setting unrealistic goals is like playing with fire because it makes you feel incapable of achieving anything. The next thing you know, you’re right back to where you started — excessive spending.
You might not have the resources to achieve most of your goals right away, but you can start paving the way to reach there. While it’s easy to suggest saving 50% of your total monthly income, it’s not practical in most cases.
If you have financial obligations to other people, you can’t split your income in half. But, what you can do is set priorities and realistic targets to properly maintain other aspects of your life as well.
2. Make a List
Organizing your priorities on a list is a great way to keep your thoughts on track and spend on things that add meaning to your life. Your list can have all the places you want to travel to or your ultimate goal in life.
It will help you start thinking about how far you are from your goals and give you a clear picture of your future strategy. Moreover, ticking off things from your checklist will give you the most satisfying feeling that will motivate you to keep going.
See Related: What Does Independently Wealthy Mean?
3. Focus on Budgeting
Before you set a budget, you need to take note of your expenses to see how much you spend every month. For example, write down your spending on living expenses, rent, debt payments, and savings.
After taking out the expenses that remain constant, allocate an amount that you will be spending on food, utilities, and entertainment. When you have it written down, you will feel more accountable for overspending than you usually would.
Make sure to keep a list of every expense and if you are spending a little more in one area, cut down on something else to make it work.
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4. Get a Clear Picture
Before you start to think about how to save money, try to get a clear picture of what you are dealing with. You need to evaluate your income in terms of your priorities.
If you owe money to multiple lenders, think about how much and how soon you have to pay off each one. While doing so, there’s no harm to think about how to discipline yourself to make more money.
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5. Save a Specific Amount Each Month
Whatever your monthly income, you can always save, even if it means setting aside $30 a month. It might seem insignificant right now, but it will gradually add up to a serious amount.
Of course, that amount will not be enough for your retirement, but this is how to discipline yourself to save money and make it a habit.
Not sure how to save money? Deposit a set amount of cash every month and wait for it to stack up until it becomes of some help to you.
When you deposit the amount, you don’t feel as much tempted to spend it as you would if it was in your wallet. This small deposit per month can be a cushion to fall onto when life becomes tough.
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See Related: How to Become Financially Literate
6. Set Goals
You have to set clear-cut goals and make a practical plan to achieve them. It is the most crucial part of financial discipline.
Your plan should clearly include how you will achieve your goals without ending up with an empty bank account. It might help to start by completing short-term goals and slowly moving on to the bigger ones.
Here are a few examples of different types of goals that might be on your list.
- Short-Term Goals
- Save a set amount of cash each month
- Eat out twice a month Take up one house project a month (putting a wallpaper, buying bedding or plants)
- Buy holiday presents (Christmas, New Year)
- Save for a getaway with friends
- Take up a new course like my increasing your income course
- Pay off debts
- Save money for retirement
- Down Payment on a house
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7. Be Specific With Your Goals
Let’s be honest. Spending on your wants might be satisfying for a few hours, or weeks, but that’s it. You can not be fully satisfied until you have achieved more significant goals in life.
Thinking about achieving specific goals will help you start saving with a happier heart.
For example, instead of imagining traveling, think about the country you want to travel to. If you dream of owning a car, search for an affordable car, and create a plan to buy it within a specific time limit, say one year.
Even if you have to pay off a debt, set your target date, and calculate how much to need to save each month.
No matter what your financial situation is at any given moment, your plan should keep you going as long as it’s practical.
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8. Practice Mindful Spending
These days, it is super easy to splurge on unnecessary things that don’t hold significance in your everyday life. One-click shopping has made paying easier than it has ever been.
But to practice financial discipline, you have to be mindful of where you are spending your hard-earned money.
By mindful spending, I don’t mean canceling out fun purchases – it’s your hard-earned money, after all. You just need a little mindfulness to stay on track.
Before you make a purchase, ask yourself these questions:
- Do I need to buy this?
- Will it make a positive difference in my everyday life?
- Am I buying this just to feel good for a few hours?
- Did I come to the store to buy this specific item?
Once you have answered these questions, you will be able to figure out whether you need to get something or not.
Moreover, you will realize that there are so many things that you don’t need at all, and you can be just as satisfied without them.
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9. Change Your Ways
One of the main reasons why most young people find saving difficult is their demanding lifestyle. They have a constant urge to update their wardrobe, gadgets, and anything that is not “trendy”.
When you start thinking about your future, you are mature enough to think beyond these little things and save up for something that actually matters.
Maybe you don’t have to party every week anymore. Or, maybe you don’t need to update your cell phone just yet.
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10. Motivate Yourself to Save
Since changing your lifestyle can be harder than it sounds, you need constant motivation. Motivate yourself to discipline your finances by changing your environment.
Use visual triggers such as sticky notes to remind yourself why you want financial stability.
If you are saving up for a trip, stick up photos of the location in your home, office, and car to keep your spending habits in check.
See Related: Why Is It So Hard to Save Money?
11. Make it a Challenge
It is not easy to swap a Starbucks coffee with one that you have to make yourself at home. But, think about all the money you will have saved at the end of the month.
Once you have set your goals, stay put to them. Make it a challenge for yourself to stick to your allocated budget.
It might get hard at times, and you might even get off-track once in a while. But eventually, you will learn to stay within your budget while enjoying things that you love.
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12. Don’t Forget to Pamper Yourself
As you follow these ways to stay disciplined with your money, don’t forget to pamper yourself. Everyone deserves to splurge every once in a while without feeling guilty.
Plan a night out with friends, treat yourself to a vacation, or make a costly purchase. Whatever you do, make sure you are adjusting your monthly budget accordingly and not falling back on your savings.
If you end up spending more on dinner than anticipated, you don’t have to feel guilty about it.
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13. Don’t Give Up
Practicing financial discipline is not a one-time thing. You have to follow your plan despite the constant peer pressure. And that’s not easy.
There will be setbacks in your way, but don’t get demotivated.
Try to accept the situation and deal with it in the most effective way. Keep your eyes on the goal, and don’t let a minor setback derail you. That is what it means to practice financial discipline, after all.