Financial Literacy Series #7: Exercising Financial Discipline

In many ways, managing your finances is like training for a sport. I have been an active runner and recently completed a half marathon! Great outcomes result from having discipline in your training.

Just like athletes focus on exercise, diet and recovery, mastering your money game demands discipline and dedication. It's not just about making money but about how you handle it - every decision, every goal, every accomplishment and every setback are part of your financial workout routine.

This quote from Sam Altman hits the nail on the head: "Hard work compounds like interest, and the earlier you do it, the more time you have for the benefits to pay off."

Think about it. The sooner you start with disciplined management of your finances, the more it grows over time. Whether you're starting your career or a seasoned pro, you can flex your financial muscles and level up your financial game.

4 ways to be financially disciplined

It takes hard work to be financially disciplined, but anything worth doing is worth doing right. Consider the below tips for being a financial champ:

1. Have a plan and stay on track.

Achieving financial success begins with having a solid planand unwavering discipline. It's like training for a half marathon; you wouldn't hit the pavement without a training regimen, or you might risk injury. Similarly, without financial goals, you're navigating blindly.

Think of your financial advisor as your coach, guiding you toward monetary milestones. Whether it's saving for a dream vacation, a new car or your first home, there's always a goal on the horizon. But staying disciplined isn't always easy. Just like in sports, setbacks occur. Perhaps unexpected expenses arise, like a plumbing issue that costs $650 to repair. Getting back on track requires discipline, even when it's tough. Athletes have to recover and rebuild after a setback, and with discipline, you can also recover after a financial setback.

To reinforce discipline, consider the 30-day rule to solidify good financial habits. Committed athletes never skip their workouts, so commit to your financial exercise. Reading financial news regularly, dedicating 30 minutes or an hour daily can inform you of market trends and economic shifts. Remember, setbacks happen, but your commitment to your goals will ultimately see you through.

2. Watch your spending.

Spendingis just as important as earningwhen it comes to financial discipline. Athletes meticulously watch their diets; likewise, monitoring your spending is crucial for financial health. After all, excessive spending can derail even the most carefully laid financial plans, much like consuming unhealthy foods undermines physical fitness.

Staying disciplined also means taking downtime for your finances to rebuild and recover. Muscles need rest after a tough workout, and your financial plan requires periodic review. Consider taking a "spending holiday" - a brief period where you curb unnecessary purchases and reassess your financial strategy.

With the rise of online shopping platforms like Amazon, it's easier than ever to indulge in impulse purchases. But discipline means resisting these temptations and staying true to your financial goals even in the face of convenience.

3. Adapt to life's changes.

Life is unpredictable, and financial setbacks are inevitable. Just as athletes adjust their training after an injury, resilience is key in personal finance. Major setbacks may necessitate recalibrating your goals, perhaps delaying the purchase of a house or adjusting retirement timelines.

But setbacks aren't the end of the road; they're just detours. Athletes can bounce back from injuries, and you can remain resilient in the face of financial challenges. Your financial goals will evolve as life progresses, requiring periodic adjustments, so reevaluate your plans. Unexpected windfalls, like bonuses or inheritances, may change your financial landscape, necessitating disciplined planning to maximize their benefits.

4. Break goals down into milestones.

Finally, just as athletes break down their training into manageable milestones, your financial goals should be similarly segmented. Setting an overarching goal, like retirement, is essential, but breaking it down into smaller, tangible milestones makes it more achievable.

Regularly evaluating your progress and adjusting your plan accordingly is crucial. Treat your financial journey like a series of races, with each milestone as a checkpoint. Reflect on what you've learned from past financial experiences and leverage those insights to set new, attainable goals for the future.

Scrutinize your financial decisions as an athlete would analyze their performance after a race and make adjustments to improve your outcomes. Your financial journey is ongoing, with each milestone bringing you closer to your ultimate goal: financial freedom.

Hustle smarter

Every decision, goal and setback is part of your financial workout routine. Like Sam Altman said, the earlier you start working hard, the better off you'll be. Starting early and hustling smarter with your money sets the stage for long-term, compounded success.