Dhruva Patel’s Financial Discipline Tips
TIPS FOR A CONSISTENT FINANCIAL
1. Make a Plan. Prepare a budget. If you don’t have a financial plan in place, it’s really hard to be disciplined about how you spend your money because you haven’t created any guidelines for yourself to follow. When creating a plan, look at both the short-term and long-term dreams you have. While a budget is part of the plan, the purpose isn’t to prevent you from spending any money. Instead, having financial discipline allows you to make sure you have money for what’s most important to you.
2. On earnings, do not depend on a single source of income. Invest to create a second source of income and subsequently more sources too so that you have a solid financial back up for rainy days such as unemployment, life threatening tragedies, and natural disasters.
3. Explore what you do best so that you can earn an income from each talent you have been blessed with. In addition to this, self-development is the key to increasing your work input value, which means you are more likely to receive promotions at work and a pay rise.
4. Refrain from spending on items that you do not need otherwise soon you will end up selling these items to be able to purchase items that you actually need. Adopt a “simple living and high thinking” attitude in life. It is never too late to embrace change. Automating your savings may help you avoid the temptation to spend your money on things you do not need.
5. When you are investing, do not put all your eggs in one basket. Spread the risk of investment by diversifying the investments from real estate to stocks in the stock exchange market.
6. Earn, budget, save and also spend on what you like to do otherwise the entire purpose of earning an income is moot. We earn an income and plan to save so that we can enjoy the gift of life. It is imperative to save, again, for rainy days.
7. Be accountable for your own savings. Making sure you track your spending helps you stay accountable for your money management. For example, if you know that you’re going to review your spending each week, such as by entering your data in a program like Quickbooks, you can motivate yourself to think twice before you make an impulse purchase because you know you’re going to see the mistake when you review your spending. On the flip side, as you build your financial discipline, you can see the fruits of your labor when you check your account balances.
8. Perform regular personal bank reconciliations with effect to financial discipline tip number 7! This gradually creates a disciplinary activity that allows you to ensure that you are aware of your banking and spending activities. Tracking and awareness of a bank balance has a great impact on investor behaviour on spending.
Enjoy while you put these tips into practice!
Article written by: Dhruva Patel (ACCA, MBA; Aspiring CFA)