Living from paycheck to paycheck means using your salary to cover your bills with little or no savings at all. Such a state of financial vulnerability can lead to stress in case of insolvency. Planning for your money helps you avoid it. You can get out of this cycle and have money to pay emergencies without incurring any debts.
Here are the 4 steps that you can work with to create financial discipline.
1.Create A Personal Goal
Have a clear and precise goal to work towards. As with everything else, having a goal on what you want to achieve can guide you on spending your money. Having savings means less risk in losing your possessions if something happens to your paycheck. Remember short-term sacrifice leads to long-term gains. Always try and have goals that are time-bound as these will keep you focused.
2.Develop A Personal Budget
Create a personal budget to help you track your income and savings. Factor in all your income streams and record all your expenses. A budget simply means you are planning for every coin you have. You can record all your daily expenses and itemize them. Itemizing your expenses helps you decide what to reduce or eliminate. Always evaluate your needs versus wants. Being intentional with your money ensures you reach your savings goal.
3.Build Financial Discipline
Achieving financial discipline means developing new habits and the willingness to stick by them. Read books and materials on personal finance. Always remember that good financial habits take time to master. Strive to get out of the comfort zone that gets you stuck on the cycle. You can stick to the financial discipline you want by avoiding the urge for instant gratification. Learn to curb the urge to spend money. Always practice mindful spending. Ask yourself, do I need it? Can I do without it? Or better yet use the three-day wait rule. If the urge to buy persists then buy it. It’s quite difficult to save if you are still using credit cards. Stop using credit cards as most of them have a high-interest rate. This can help you dig your way out of a debt hole.
Investing helps your money grow. Paying yourself first ensures you consistently put away the amount for saving before spending. Enhance your discipline by ensuring you set aside a certain amount periodically. You can also have the amount to save automatically drafted from your paycheck every time you get paid. Avoiding spending more than your earnings, or rather find ways to make more. Savings will cushion you in case of a disaster.
Always remember that investing is not “a get rich quick scheme”, it takes time and consistency to achieve your goal. Learn to develop a long term view of finances. Money management plays a huge role in how much you can save. You can envision what your future would look like and work towards achieving it. You have the power to do it. Keep practicing good habits and with time, patience you can manage.