How I learned to build my Financial Discipline — you too can
I have been an avid follower of the latest financial content to gain the necessary insights and begin my journey in personal finance. However, as the personal finance space has evolved, the online content has become repetitive and mind-numbingly mundane. While the basics of personal finance are the same and don’t really evolve with time, it is crucial to address the fundamental aspect of how a person can improve their relationship with money — Financial Discipline.
I come from a humble background, with a lower-to-middle-class upbringing. Throughout my life, I have seen my family encounter significant challenges in managing even the basic household expenditure. Unfortunately, this issue is now commonplace in today’s world, with extremely easy access to credit and an overwhelming barrage of so-called financial expertise from friends and family.
The Problem
Now, these challenges are generally attributed to a low income, but upon learning about personal finance, I have come to believe that the problem was multi-fold, with reasons such as Lack of understanding of how money works, Inability to maintain basic financial hygiene, Societal influences but the most significant is DENIAL.
Here’s a confession — I was also guilty of not knowing basic financial hygiene, and for a better part of a decade was embroiled in a web of debt with no savings. That said, I have generally been a disciplined individual in other aspects of life and have always been able to steer away from societal influences to make independent decisions.
Bad financial choices have a cascading effect and can decimate one’s self-worth. Thus, it’s understandable that people tend to avoid recognizing the problem and living in denial of their financial situation. After many years of financial struggles, I decided to bring the situation under control through extensive contemplation in order to identify & implement the steps towards financial well-being. Through a rigorous and disciplined approach towards personal finance, I was able to turn my financial situation around and come to a point where I can afford to take a break from full-time cybersecurity work and embark on my journey of LEARN, SHARE, CHANGE through which I will strive to achieve the credentials to change people’s perceptions about money and enable their own financial well-being journey.
Approach to build financial discipline
Having done so myself, I can attest to the fact that building Financial Discipline is Simple but not Easy. The process is incredibly straight-forward to implement but the most important aspect is to sticking to it. However, it’s definitely possible for everyone — the key is to choose.
Here’s the process I followed to improve my personal finance, which I hope will help you:
1. Recognize the need for change
As I mentioned earlier, there was extensive contemplation on my part in order to overcome my financial struggle. This, in my view, is the most crucial and the most difficult step you have to take. The difficulty lies in needing a radical change in behaviour, and that is where we face the greatest resistance. If you are struggling money-wise, please dedicate some time to reflect on your financial choices and evaluate your current financial situation objectively. Your reflection would eventually lead to you believing that situation needs to improve, and that will provide the impetus to effect the necessary changes.
2. Track your expenses
I cannot stress enough on the importance of expense tracking. This step gives you granular information on where your money is going, thus helping you identify the various expense items. Armed with this information, you must work on cutting down on unnecessary expenses. As for methods of expense tracking, it is your personal choice whether to automate it or perform it manually. There are a plethora of apps that offer this service. For me, I prefer to do it manually with a combination of spreadsheets and Moneypoint. Feel free to choose your own method.
3. Develop and adhere to a budget
Budgeting is the exercise which helps you to decide the expense categories that must be kept for maintaining your daily expenses. During financially challenging times, I recommend a budget where only essential expenses are included and any other expense is removed. Strict adherence to my budget is mandatory for you to improving your financial journey, as it did in mine. Minor deviations are understandable, but by-and-large, the budget should be followed.
4. Be debt-averse
Taking on debt to resolve family crises was a significant hindrance in my financial journey, thus shaping my averseness to debt. In my experience, debt is the biggest contributor to bad financial health in today’s society, and that’s primarily because people don’t know how to use debt. So, debt averseness becomes an invaluable choice during bad times. If you have a steady income, never take additional debt unless it’s an emergency, and even then, understand & document the implications on the budget and long-term financial well-being.
Conclusion
There are several other considerations which I’ve excluded those to simplify the approach, such as insurances and emergency funds. As these depend on personal circumstances, they need to be incorporated into this approach as well.
Lastly, what’s most important is Patience, because most often there’s no quick fix to financial struggles. If you keep taking small constructive steps in the right direction, it will eventually lead you towards your desired financial outcomes.
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