By Bill Taber and Anastasia Taber, CFP®
Financial discipline means setting specific financial objectives (for spending and saving) and sticking to the strategy you set up for yourself. Once you’ve become financially disciplined, you can move forward toward financial independence.
But what does it take to get there?
In this article, we explore the full spectrum of financial discipline topics from defining the primary roadblock, to listing common challenges, and finally to providing our suggestions for pursuing the best strategy going forward.
The Biggest Barrier to Financial Discipline
Let’s start by exploring the biggest barrier to financial discipline: living paycheck to paycheck.
Unfortunately, Americans who live paycheck to paycheck are more common than you might think. According to a recent MarketWatch survey, more than 2/3 of Americans struggle to save or invest after paying their bills.
The main causes of this roadblock to financial discipline are:
Easy credit: Student loans, credit card debt, and other types of debt are easily obtained and can take up a large amount of income, leaving little space for savings.
Increasing cost of living: The cost of housing, food, transportation, and other necessities has increased due to inflation, making it more difficult to save money.
Unexpected bills: Emergencies like medical bills, auto repairs, or job loss can wipe out savings and create financial stress.
Insufficient budgeting: It’s challenging to know where your money is going if you don’t keep track of your earnings and expenses.
Low income: Particularly for people with lower incomes, stagnant salaries haven’t kept up with rising living expenses.
Common Challenges of Financial Discipline
Now let’s take a look at the common challenges people face when trying to develop financial discipline. Even if they’re not living paycheck to paycheck, the list of difficulties includes:
Procrastination: By postponing crucial financial decisions and actions, procrastination can erode financial discipline by resulting in missed opportunities and larger costs.
Emotional spending: Some people use spending as a coping mechanism for stress relief.
Insufficient financial knowledge: Financial literacy and fundamental budgeting skills are lacking in many Americans, which makes it challenging for them to cultivate financial discipline.
Social pressure: Feeling the pressure to keep up with the Joneses can result in making purchases you can’t afford.
Debt burden: Having high-interest debt might make prioritizing investing and saving very difficult.
Reckless spending: The urge to buy things you merely want but don’t need is an enormous challenge to creating a strategy for financial discipline.
Lack of accountability: Keeping your motivation levels up can be challenging if you have a partner or friends who don’t share your goals of improving your finances.
Overreliance on credit: Relying on revolving credit cards, payday loans, and other forms of high interest debt to temporarily make ends meet can dig you into a financial hole, making it just that much more challenging to save and invest any money for reaching long-term financial goals.
In our experience, it all comes down to accepting personal responsibility for your current circumstances, having a desire to change, and executing a course correction sooner than later.
Strategies for Increasing Your Financial Discipline
Take a look at the list below for our suggestions for cultivating financial discipline to control your finances.
Set long-term financial goals: Define your long-term financial objectives, such as debt repayment, emergency fund building, or down payment savings.
Reward yourself: Reward yourself for staying true to your budgetary goals and acknowledge your accomplishments.
Don’t compare yourself to others: Comparing your financial situation to others can lead to inflated expectations, which can then cause discontent with your own financial circumstances and possibly impulsive spending to maintain appearances.
Automate savings: To develop the saving habit, set up automatic payments to your investment and savings accounts.
Track your progress: By giving you a clear visual picture of your accomplishments, tracking your progress can help you become more financially disciplined by encouraging you to stay on course and make wise decisions.
Learn from your mistakes: Through establishing a budget, you can receive important insights into your spending patterns and decision-making processes. Learning from your financial mistakes can help you steer clear of costly mistakes in the future.
Practice habit stacking: By forming new habits one at a time instead of all at once, you can significantly boost your financial discipline efforts.
Wait: Especially for non-essential purchases, give yourself some time to mull over whether or not it’s a good decision.
Consult a professional: For personalized advice and support, think about speaking with a financial counselor.
We’re Here to Help
Cultivating a financial discipline strategy that works for you to create wealth is absolutely worth the effort. Use the ideas we outlined above as motivation to continue pursuing your wealth goals.
At TABER Asset Management, we’re committed to helping our clients grow their wealth. That’s why we make it a priority to have a complete understanding of our clients’ personal values and financial goals as we work together to build personalized strategies.
Get started today by scheduling a 15-minute intro phone call online or reaching out to us at 515-557-1860 or invest@taberasset.com.
About Bill
Bill Taber is President and Founder of TABER Asset Management, an independent, fiduciary wealth management firm, in Des Moines, Iowa, that strives to do one thing well: manage their clients’ money by creating wealth, building wealth, growing income, and preserving capital so they can experience financial freedom. With more than four decades of experience, Bill is dedicated to building relationships with his clients and their families and walking alongside them as they navigate financial decisions. His favorite days are the ones when he gets to witness the joy and relief on his clients’ faces when they realize they can pursue their dreams and live their ideal lifestyles. Bill is known for going the extra mile, getting things done with integrity, and working with a stewardship mentality.
Bill graduated from the University of Iowa with a bachelor’s degree in business administration and fell in love with the profession when he got to help one of his first clients—his father—turn his lifetime of hard work into a dream retirement. He got his start in the industry as a corporate services representative for Bankers Trust Company and spent decades working as Assistant Vice President of E.F. Hutton & Co. and First Vice President of Principal Financial Securities. He is also a graduate of the E-Myth Worldwide Mastery Business Development Program and is Series 65 registered.
In his spare time, Bill enjoys giving back to his community and spending time with his family. His hobbies include traveling, gardening, reading, and practicing yoga, Pilates, and meditation. He also loves the simple joys of listening to music, going for walks or bike rides, and being in nature. To learn more about Bill, connect with him on LinkedIn.
About Anastasia
Anastasia Taber is an Associate Advisor and leads the financial planning services division at TABER Asset Management, an independent, fiduciary wealth management firm, in Alexandria, Virginia, that strives to do one thing well: manage their clients’ money by creating wealth, building wealth, growing income, and preserving capital so they can experience financial freedom. Anastasia is a CERTIFIED FINANCIAL PLANNER® and has a Bachelor of Arts in English from Georgetown University. She has years of experience working for one of the largest REITS in the U.S., as well as in property management and accounting at a global law firm in Washington, D.C. Anastasia is passionate about exceeding her clients’ expectations and building caring, long-term relationships based on trust. She is known for being detail-oriented and committed to excellence in her work. Anastasia is a co-host on the Creating Wealth podcast. To learn more about Anastasia, connect with her on LinkedIn.
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