Discipline (Or Lack Thereof) and Personal Finance

“What has discipline got to do with personal finance?” you ask? Well, every thing actually! To stay below your means, you need discipline. To stick with a budget, you need discipline. To cook at home instead of eating out - discipline. To get rid of debt – discipline. To not chase the Joneses - discipline. To invest wisely - discipline. The more you think of it the more it becomes obvious… personal finance is all about discipline! So, what if you are like me - a free spirit who lacks discipline of any sort? Here are some tricks that I use to simulate the semblance of being disciplined.

Automate things.

When you automate things, you don’t need to be disciplined about it consciously! That is why automating things is one of my favorite ways to handle my finances. Every pay period, before I receive my paycheck a big chunk of it is automatically taken out for the 401K and ESPP. The remaining amount gets split up into three different accounts – two for savings and one for regular bills. I have automatic payments set up for all the bills as well. So, by exercising discipline on one afternoon and setting up all these automatic transactions, I save myself the agony of having to be disciplined at the end of every month.

Be disciplined in short dozes.

Generally when you look at a huge task in front of you and think of being disciplined, it gets quite overwhelming. But when you break it into smaller units, it becomes easier to handle. When we started our battle against debt, we were staring at a total of over $40,000. We broke it into smaller tasks and set goals for how much each of us would pay off each month. That by itself would probably have worked, but taken a lot longer. Instead, what helped us to really accelerate the process was to rely on additional short bursts of discipline where we chose to fore go some planned expenditure and apply that amount towards debt. Try it – have long term plans for your minimum expectations, but use short spurts of extreme discipline to exceed your minimum expectations to reach your goals faster. If you try to be extremely disciplined all the time, it will likely not be sustainable.

Keep yourself away from situations where your discipline will be tested.

To me, that literally translates to staying away from malls. And from the “deal” websites on the Internet. I have a weakness for the word “sale”. Somehow that one small four letter word has the power to completely break my will and make me buy stuff that I don’t even need. By staying away from places where I might come across a “sale” sign, I take myself out of situations where I need to impose extreme amounts of discipline on myself.

Don't beat yourself up when you lack discipline.

Sometimes, even the best of intentions are not enough. Beating yourself up and feeling guilty will just not help. If you can rectify the situation – great! Do it. Better late than never. But if not, then just keep track of the number of times you were not successful. Initially, just focus on keeping that count smaller than the count of the number of times you were indeed successful. Slowly you will start to feel proud of the number of times you were successful, and the positive feeling will keep you pushing to not fail.

Acknowledge small successes, reward yourself for big ones.

Every time you resist the temptation to keep up with the Joneses or to buy something on impulse, acknowledge it. Use the count of the number of times you were successful to offset the negative feeling of the times your fail. Make this a source of pride. And when you reach some of your bigger goals, take some time out to celebrate. Just make sure that your celebration or reward does not undo all that you have achieved so far :) With a system based on rewards instead of punishment, you have a much better shot of success, be it getting out of debt or building up your savings.

Hang out with more disciplined people.

Discipline, like a lot of other things in life has a tendency to rub off. If you go out for shopping with a friend who does not throw money away on random purchases, it is likely that your purchases that day will be a little less as well. If you hang out with friends who bring their lunch to work, it is easier to resist the temptation to go out to grab a bite. If you have friends who discuss about index investing, instead of boasting about individual stocks, you will also learn to appreciate the value of index investing. You get the idea, right?

Turn it into a challenge.

I have been trying to cut down on excess consumption and practice a simple frugal life style. Boy, does that require discipline! A very common piece of advice you get when you read any frugal lifestyle article is to take lunch with you instead of eating out. But I am a foodie and the thought of eating leftovers or sandwiches day after day was downright depressing. So, I promised myself that if I take lunch on three days of the week, I can eat anything I like, anywhere I like on the other two days. During the first few weeks when I managed to take lunch three times a week I was quite thrilled. As the weeks rolled into months, it became a kind of a challenge – to see how long I can go with this plan. It is now close to 10 months now, and except for two weeks or so, I have stuck with it! My challenge for now is to keep at it for a year. When I hit that milestone, I am sure I will extend it to two years :)

Advertise your intentions publicly.

When all else fails, use this! Make your intentions as public as you can. I use this with the purchase of my car. When I started working, I was all set to go out and buy myself a brand new car (or possibly an SUV to accommodate for our future kids!!!). Fortunately, the better half somehow managed to convince me to wait a while. Over time, I have come to realize what a bleeder a new car would have been on our finances. But every now and then, I am still tempted to go get a new car. So, I have gone and told all my friends that I plan to use my current car until the wheels fall off. And when I do buy a car, it will likely be eco-friendly and possibly second-hand. And I keep harping on this blog about not ever buying a brand new car. All this prevents me from going out and buying a brand new Hummer on a whim one fine day :) Try it – there is nothing that motivates you to practice some self-discipline like the possibility of huge embarrassment otherwise :)

Do you have any other tricks to offset the lack of discipline? If so please, do share!

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beth said...

This is some of the best-written advice I've seen. You've managed to write my habits into general terms, and the best solutions to them. I need to challenge myself from time to time, and I really needed to automate savings before I really could start saving--which was just recent, so I'm still working on it!

Thanks for writing it all so plainly. It'll help me.

ispf said...

Beth: Thanks for stopping by and your nice comments! I am glad you liked the article!

Steven said...

Great advice, personally the thing that's helped me stay the course is to partner up with a friend who is holding me accountable for achieving my goals and vice versa.

I think finding a partner could help people stay the course when following the strategies you've provided.

ispf said...

Steven: Thanks for mentioning that tip! Partnering up with a friend has really helped me a lot too! I don't know how I could have forgotten that !!!!

Super Saver said...


Great advice.

I have found keeping away to be very useful. To cut down on eating junk food, I stopped having it in the house.

I personally use an additional element to help my discipline. Where possible, I measure and track my results - e.g. weight loss, savings increase etc.

Here via CoPF