One may wonder what Financial Discipline is. Simply put, it is the act or process of setting aside certain financial goals in terms of spending and saving, and determining how those goals are achieved. That is, it is the control you place on yourself as it relates to financial activities. The establishment of financial discipline is the first step towards becoming free and independent financially. Here, let us consider some ways in which one can actualize financial discipline.
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1. Setting financial goals
It will be almost impossible to be financially disciplined without setting a specific goal of how to save, spend, and invest your finances. For someone that earns an X amount of income (like salary earners), he can make a goal of investing a Y amount of money, then save a Z amount of money before spending the rest. By setting this goal, you will have something to direct your financial activities. Financial goals can often range from short term to long term. However, idea is not to set something impossible but something that is doable.
Setting a goal that is beyond your direct ability may lead to discouragement and it will become counterproductive. Imagine someone earning $1000 monthly setting a goal of saving $1200 monthly, from where does he hope to be getting the remaining $200 from? Financial goal should be based on what you have at hand already, not what you wish to have.
2. Having a spending budget
One of great financial improprieties of many people is impromptu and extra-budgetary expenses. This is why budgeting is necessary to prevent this kind of spending. While budgeting, you have to put your needs into consideration and favour them more than your wants. It is when you have acquired your needs, then you will begin to consider your wants. That someone has bought a particular thing, if you do not need it, then you do not have to buy it.
You do not have to go outside your budget just to impress the people that are not even aware of your existence. As a matter of fact, some of these people are broke but are only appearing to be rich, and if you follow them in their supposed flamboyant lifestyle, you will put strain on your pocket. What you cannot afford today should not make you to go beyond your financial limit. In clothing wears, for example, if you cannot afford a designer cloth, then go for a generic cloth. It is better to wear the clothes that you can afford than going broke to get designers.
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3. Having emergency funds
More often than not, unforseen situation occur that will require some funds to settle, some of these situations happen without prior information. So one has to be setting apart some funds for emergency, so that in the case of eventualities, one will have what to fall back on. These funds can be updated on a weekly or monthly basis as you have planned, but it should be regular.
Many people have been saved by these emergency funds and they did not have to go borrowing in the face of eventualities. You can even get a piggy bank that can be used for this purpose. The idea is to be consistent and dedicated in keeping to it. These minor things can go a long way to increase one's financial discipline.
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