For me, it all comes down to delayed gratification. The lack of financial discipline will have you headed for one of two things: either you’ll end up broke or your financial disaster will be soon arriving.
The Importance of Financial Discipline
I think we all have our hard-headed ways about ourselves, but I have to admit when it comes to your finances, if you have no financial discipline in this area, then you are sure to be in a financial bind sooner or later. Discipline in any area of your life takes dedication, consistency, and commitment. The discipline practiced will only get better with time and effort. Being in denial stops all progress or any remedy to the problem and keeps you in an excuse state of mind. Signs of financial denial might include a person bringing up an accomplishment of some sort to justify and cover up the denial that they don’t have a hold over their finances.
Signs of Financial Denial
- Overall amount of money does not get better year after year.
- No plans with money in case of an emergency.
- Not keeping track of money (so they don’t know what they spent nor what they spent it on). Not keeping track of money coming in and going out will surely lead you to not knowing where you stand when it comes to your finances.
- No plans for retirement or money flowing in when they stop working, whether that be through retiring or simply not being able to work.
- No plans on what to do with their money when they get it. (The 5 P’s – Proper Planning Prevents Poor Performance)
Delayed Gratification and Financial Discipline
Financial discipline has a lot to do with the ability to delay gratification. One of the things I can pride myself on was my ability to have a car that was paid off in the first two years and to keep this car long enough (16 years), 11 years before I bought another car. Those eleven years before the purchase of another car were filled with delayed gratification. Now, had I been in the same mindset I am today at that time, my finances would have been in a lot better shape. I am happy to say that during this time of delayed gratification, it allowed me to learn more and more about the SUV that I was driving, thus allowing me to learn how to do things without having to pay for them, putting more money back into my pocket. In this same time frame, I witnessed a family member buy two separate cars, struggle with the car payments, and ultimately either total the car or have it just not work anymore.
The Role of Financial Education
Lack of financial discipline as well as the lack of financial education leads to a number of financial problems. Schools do not teach you how to budget, conserve, or save. If no one is there to pass on or demonstrate the ability to do these things while you are young, then unless you just naturally have a knack for breaking down and crunching the numbers, you are in a whole lot of trouble when it comes to finances sooner or later.
Financial Fitness
Just like the people you see who are physically fit and in shape, you have to be in shape when it comes to your finances. Just like when you train your muscles you notice you get more in shape, bigger, leaner, etc. The same applies to getting financially fit. The more you educate your brain and apply financial principles, the better financial shape you are in. As the saying goes, if you don’t use it, you’ll lose it.
Tracking Your Finances
When you begin to keep track of and look at the numbers when it comes to your money, a lot starts to change. The way you spend and the way you go about living your financial life will be in question every time you have to make a decision regarding your finances. The feeling you get when you accomplish one of your financial goals as a result of your financial discipline will be amazing!
Conclusion
So basically in a nutshell, if you start paying attention to the numbers (cost) of everything you do, that will lead to you realizing where you fall short. When you realize where you fall short, then you start making adjustments (budgeting & saving). Once adjustments are made, you realize the progress that has been made, and in turn, you increase your bottom line and your overall financial education IQ.