While it’s not something that we, as Americans, tend to talk about much we actually get very emotional about money. For us, money can mean so much more than just dollars and cents. It’s a salary that makes us feel valued, or a car that shows the world we’re special, or an expensive dinner to impress a loved one. We may nod our heads and agree that saving for the future makes sense, but in reality, we’d much rather run up the credit card and buy a whole new wardrobe. At the end of a hard work week it can be especially difficult not to take that paycheck, run out, and buy everything in sight – in an attempt to make yourself feel better.
Of course, we don’t need to tell you that that’s not the brightest thing to do. But so often, emotional issues get the better of our rational brain and the money “burns a hole through our pockets.” Unplanned purchases can wreak havoc on even the best-laid financial plans.
Here are a couple tricks you can use to maintain your financial discipline and stay focused on savings goals, even when things get tough.
First of all, it helps to have a financial plan. Creating a realistic budget is the first step to getting control of your finances and establishing discipline in your spending habits. Most people create a budget out based on what they think they should be spending on various things – phone bills, groceries, entertainment – and often underestimate certain areas at the expense of others. At the end of the month, they are surprised when their bank balance doesn’t reflect what their budget looked like on paper at all.
To avoid this common pitfall, keep track of your actual expenses for a month or two. Write down every little thing – from your morning cup of coffee to the afternoon trip to the office snack machine, to drinks with friends in the evening, to paying your bills online. The point here is not to deprive yourself or curtail your spending, but simply observe and record. At the end of the month, add up your expenses under the various headings to which they belong. Once you know your real “numbers,” you will easily see where you have been underestimating your expenses and be better able to exercise some financial responsibility. This may seem like a lot of work, but once you get into the habit, you will wonder how you ever survived without financial discipline.
Another word on financial discipline: when you are making your new budget, be sure not to deprive yourself when it comes to things like entertainment, new clothes, and other pleasures. It’s far better to give yourself planned treats than it is to make yourself unhappy with financial problems. The point here is to make your life better and financial discipline is the key to doing that in a lasting way!