Goals and discipline. We make life goals; we make financial goals. We don’t always follow through on goals.
When I did some thinking about it the other day, I realized that discipline is just being able to stretch out that initial burst of motivation you had for your goal and distributing it over time. We need to remember why our goal is important to us and not just arbitrary. The goal has to remain alive within you, present in each moment. Are these words glossing over for you? That’s what it’s like to carry a goal around with no deeper significance to it. Your goals can’t be pictures in your wallet, they have to be on fire. Goals have to be something you practice every day – not abstract items on some bucket list somewhere.
Money management takes discipline. We all have similar financial goals: a certain amount of networth; the ability for our income to pay for all our expenses; the desire to be financially free. We want to be there now! But we all know the painful reality of that not being able to happen instantaneously; we plod through paycheck to paycheck and can move towards the Big Financially Free Dream only one step at a time.
But you know what the alternative is (aside from winning a lottery, which we’ll deal with separately)? The alternative is to not do anything at all and get financially fat and stagnant.
Let’s say you just came into a small “windfall” of $500 bucks somehow. It’s not a huge amount, but it’s not a small sum either. It’s not everyday you just find $500 bucks on the ground. What do you do with it?
If you’re like me, you might think: “I’d really love to put this all into savings account X; think of how much faster the interest would compound if I could do that.” Or: “I should buy 10 shares of XYZ stock and start collecting more dividends in order to boost my cashflow. This is just the extra money I needed.”
But then I think: “well, I still owe $3000 on my credit cards, and I’m not going to get anywhere until they’re paid off. Plus, I still owe $20,000 in student loans, and they’re holding me back too.” So I end up paying the bills, because it’s the prudent thing to do.
But here’s what we need to understand: money management is going to be the same at every level of income. So with each new receipt of income, we need to allot it according to our long term goals, more or less. Take $100 of that $500 and put it towards your investment or travel fund. Then spend the other $400 on bills and debt if you need to. This is formally no different than the idea of “pay yourself first,” except with a focus on keeping your goals in sight in the present moment.
It can be hard to keep on the path when we have temporary, momentary obstacles, but the way around these obstacles is just to walk right over them. Keep your final goals in sight, on fire every step of the way. You can then act in accordance with them. In this sense, we’re living our life backwards: we have an image of where we want to be, but we must start acting now as if we were there. We do this by taking every small step to get there – $100 invested here, $100 invested there. Boring. In slow-motion. But once you do this for a while, you’ll see that you’re already “on your path” and you’ll be pleased with that.
Being “on your path” is a bit like “staying on your horse” — you don’t want the ups and downs of the unexpected things in life to knock you off your ride (I’ve also used the analogy of “not rocking your boat”). You know where you’re going, you need to be able to “stay on your horse” or “stay on course” in order to get there. Riding this horse is the challenge. With proper money management and income allocation, you can create a level of balance and stability to protect you against anything getting in the way of your goal.
Some of you might find this glaringly obvious, and perhaps it is at a purely theoretical level. But we need to remember these tips for getting us through those days when all we can see is uphill ahead, or the big pile of debt chained to our ankles. It took me a while to see just how much fretting over my financial situation was sucking up much of my energy. The way out is to take action. If you can’t take much action, at least take some. Actions have their own power of compounding.Related Posts
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