The retirement journey is a long and tedious one for most people. Apart from the immense research and planning that goes into it, you need to set key strategies to ensure you stick to the plan. Amongst all the strategies, one of the most important is to develop financial discipline for retirement success.
But what is financial discipline? Why is it so important in your pension journey? How exactly can you develop it? This article provides answers to these questions to help you smile your way to your retirement.
What is Financial Discipline?
According to The Collins Dictionary, discipline is the ability to behave and work in a controlled way which involves paying respect to a particular set of rules and standards. From that, it can be deduced that financial discipline is the act of being able to set specific saving and spending goals. It also includes an important element of measuring yourself against how well you achieve these monetary goals.
Why is Financial Discipline for Retirement Success Important?
Developing a financially disciplined culture is critical to having a successful retirement. With discipline, you can efficiently and effectively stick to your retirement plan which ultimately increases the chances of achieving it.
Here are some other reasons why it is important:
● Financial discipline helps you beat procrastination. Therefore, you can start saving for your pension early.
● It has a positive effect on your psyche which means the more you build a disciplined financial life, the more likely you are to take up even better financial habits.
● Being disciplined builds your mastery. Once you make a commitment to your financial journey and stick to it, you become a master at it.
● It makes you reliable. All the parties involved in your pension saving journey can trust you to follow through with it.
● It helps you navigate difficult emotions. Being financially disciplined ensures you will follow through with the right thing even in moments when you don’t feel like it. It also helps you reduce and manage the stress that comes with pension saving.
The Steps to Financial Discipline for Retirement Success
Get Organized
Getting organized is the first step to effectively and efficiently executing anything. After all, it is often said that for every minute spent organizing an hour is earned.
Create a detailed list of all your needs and wants then categorize them in order of priority. Writing a list helps paint a clear picture of your financial position helping you make better decisions.
Determine your current income and expenses
Next, create a balance sheet of all your income against all your expenses. Are they balanced? Are your expenses outweighing your income or vice versa? After doing this, you will learn exactly where you are financially, and whether you need to cut back on your expenditure or not. While at it, come up with a clear budget that matches your situation.
Set SMART financial goals
The SMART goal system is a successfully proven goal-setting method. Set goals that are specific, measurable, achievable, realistic, and time-bound. The method is effective as it ensures that you set goals that are within your reach, and whose progress you can easily track.
Automate your savings
Almost everyone can relate to a scenario where you set a goal to save a specific amount towards something, then do something completely different. Automating your savings takes the responsibility of depositing your savings from you. This way, you avoid the temptation to not save at all.
Whatever the goal is, whether you’re saving towards your emergency fund or your pension, automating your savings is the way to go. It would help to consult your service provider to know exactly how this will work as different institutions have different policies.
Stay consistent
Starting your financial discipline for retirement success journey is one thing, staying on it and finishing strong is another. They say nothing beats consistency. Once you set yourself on the path, follow through with the plan and watch it come to life. Remember, you will experience setbacks, the key is to not give up.
In Conclusion
Financial discipline is the act of setting specific monetary goals and matching oneself against the attainment of these goals. In addition, you need it to be on track and improve your financial situation or retirement plan. You can develop this discipline by getting organized, being clear on your income vs expenses, setting SMART goals, automating your savings, and being consistent.
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