Motivation for Financial Discipline

Last week we discussed tips to attaining and maintaining financial discipline. But we all realize that discipline is hard. Financial discipline can be boring. It appears one is missing out on all the fun one’s peers seem to be enjoying. Saving for a tomorrow that may never come? “Let’s eat and drink, for tomorrow we die”, some may say.

But tomorrow does comes and for our generation that is enjoying the benefits of medical science, tomorrow is very long. No matter how boring saving might be, poverty is even more boring.

A financially challenged person does not have choices. He cannot choose where to live, he is forced to live in certain neighbourhoods because of his financial ability. No matter how brilliant his son is, he cannot send the boy to Harvard University, where the youth’s brilliance would be further developed. His entertainment choices are limited – he cannot visit the Great Pyramid of Gaza or enjoy the splendor and majesty of the Niagara Falls or even Victoria Falls in Africa.

We won’t take imported rice ― Oshiomhole

Financial insufficiency can also make life a mere existence. It is one thing not to have had the opportunity to create a prosperous financial future but if one has the opportunity and fritters it away due to indiscipline then, one has no one else to blame but oneself. No matter how hard we work, no matter how much we earn, a time is going to come when we can no longer work. Mandatory Retirement Savings Accounts (RSA) have not proven to be enough to sustain retirees given the longer life medical science now delivers. Many American pensioners outlive their 401k savings as the RSA is called there. Many pensioners here and abroad have to compromise their quality of life and trim their lifestyles because of financial indiscipline during their working years. On the other hand, we see some senior citizens, who even though they started with nothing, upon retirement, continue to maintain their lifestyles, give generously to friends and family and even live a substantial inheritance to their children and grandchildren.

Maintaining a good life in retirement is motivation for financial discipline but some young people procrastinate thinking they have enough time. They need to consider the concept of compound interest. This is interest earned on interest. So, a person who starts investing 10 years before his colleague can be two times richer than his colleague because of the benefits of compound interest. It works for both money market and stock market investments. Companies give bonus shares and the investor would earn bonus share on those bonus shares when future bonuses are declared. No wonder the say, the rich get richer. It is due to compounding. A person who starts investing in his 30s can be twice as prosperous a one who starts in his 40s. With the benefits of compound interest, a person who starts early with a small investment can be richer than a person who starts late with a larger investment. Start early with small but steady investments and watch your wealth grow.

Like we mentioned last week, financial discipline can also be sustained by “flocking with birds of the same feather”. If you surround yourself with friends whose source of pride is owning the latest cellphone or designer bag, then you would have no one to cheer you on your financial discipline journey. You need friends who prioritize and celebrate investment portfolio size, donations to charity or buying of real estate. They would cheer you on and encourage you to a life of financial discipline. Be careful though, some people want prosperity without the discipline. Differentiate between the two types of people. You want friends who would give you investment tips, financial management ideas and financial discipline tactics that lead to gradual sustained wealth creation. Avoid those who bring get-rich-quick ideas, that promise ridiculous return on investment.

Read the biographies of financially successful people. Sometimes casually observing their lives from a distance is not enough, you only see how they are spending now that they are successful. Their biographies or interviews contain principles and strategies which they used to achieve the financial discipline that led to their financial success. Reading would also expose you to their investment tactics which would enable you to invest smarter and achieve financial goals faster.

Therefore, financial discipline must be undergirded by financial knowledge. We all need knowledge of investment vehicles and their accompanying income and of events and trends in the economy and how they can impact our investment portfolios. So, keep updated and disciplined.

Happy investing.

Nigerian Tribune