Category: Blog
FINANCIAL DISCIPLINE – ROBERTA O AVWEROSUO-ADEDA , IMA ACCREDITED MONEY ADVISER( MIMA)

We all have money and use it in various ways. I don’t believe anyone would deliberately waste his or her money. To be disciplined is to train oneself to obey rules or codes of behaviour. To discipline yourself is to CONSISTENTLY behave in a certain manner or do certain things to achieve a certain goal. We all know that athletes train themselves to achieve the goal of winning medals and being the best at what they do.

To be disciplined in any aspect of our lives, we must have a goal that is the benchmark for what we want to achieve. Financial Discipline means training yourself or deciding to manage your money, spending or savings towards achieving a specific financial target. How do we achieve financial discipline?

  1. HAVE A GOAL: You cannot be financially disciplined without a financial plan. There must be something that you want to achieve. For instance, you want to buy a new microwave, car, go on a holiday or save for your children’s education. There must be something that you want to see happen as a result of your financial discipline. You should have short term goals (going out to the cinema one a quarter), mid-term goals (putting money away for a retreat) and long -term goals (putting money aside for children’s education or down payment for a house). We need goals which will guide us like a map, something that you are working towards achieving. You can see it in your mind’s eye and it takes you to where you eventually want to be or what you want to do. Gool setting is very important to financial discipline.
  2. BOOST YOUR DISCIPLINE: You must put structures in place to boost your discipline. What do I mean? Something that will ginger your discipline. The money that you need for that holiday will not suddenly appear, you will have to do something. One of my financial boosters is to transfer money from one account to another which I do not use regularly. It has no bank card and for me it’s a forgotten account. You may join a thrift group with your friends where you make specific agreed monthly contributions depending on your capacity.

 

  1. TRACK YOUR MONEY: Know where your money goes on a daily basis. Check your online bank balance daily. Some people just look at the statement without seeing what is happening because they do not pay attention to details. Some deductions and charges could be duplicated or simply taken in error. Know the dates when your direct debits are due on a weekly and monthly basis and who the beneficiaries are.

 

  1. RESIST IMPULSIVE PURCHASE: Buy only what you have listed on your shopping list. For instance, I have a shopping list all the time and have disciplined myself to buy what I have on that list. That is not to say I do not sometimes buy what is not on my list. Train yourself to buy what you have on the list and resist impulsive purchases which will derail your overall financial goals. You end up spending more than you can afford. You just cannot buy because its looks good.

 

  1. SAVE REGUALARLY: This is another way to discipline yourself financially. It could be any amount depending on your capacity. Take note that the seemingly “small” amount will add up with time. You can just see it as another monthly bill you must pay especially when tempted to spend it. You will need it for emergencies as we will all have them in our lives because we usually have fixed income.

 

  1. DIFFERENTIATE BETWEEN WANT & NEED: We usually find ourselves caught between deciding whether to spend our money on what we WANT or NEED. A “NEED” is essential to your existence while a “WANT” is something that we desire to have BUT can do without in the short term. They usually fan our egos. You may need a jumper in the weather as opposed to going out and having a meal with your friend during the pandemic. It is very important for you to weigh your options because reaching your financial goal requires discipline.

 

  1. AVOID PEER PRESSURE: This is one factor that can affect your financial discipline either positively or negatively. The saying goes that “show me your friends and I will tell you who you are”. If you are easily influenced by other people, the likelihood is that you will not be able to make decisions about your finances. The desire to belong and always wanting to have the latest things because your friends have them can derail your financial goals as you. Be yourself, maintain your lane and stop competing with others. This can cause a lot of financial strain on you and you lose financial focus.

 

It is very important that you maintain financial discipline if you want to achieve your financial goals. There will always be a financial emergency but we can reduce the impact if we are financially disciplined. You must train yourself to abide by the financial rules that you have drawn up to achieve your financial goals.

 

 

 

 

 

 

 

     


7 Steps to Manage Your Money

There is no time like the present when it comes to learning how to manage money better.

WHILE THERE’S NEVER A bad time to make a financial fresh start, it makes sense to rethink how you’re managing your money at the start of a new year.

“It’s a really good time to start a budget, because all your big numbers are coming in,” says Jon Brodsky, U.S. CEO of Finder, a comparison website for financial services and products. W-2 and 1099 tax forms compile income information while year-end summaries from credit card issuers such as Chase and Discover make it easy to review annual spending patterns.

However, creating a budget is only one part of how to manage money better, and if you start there, you’ll miss a few critical steps. These include mapping out your current finances and prioritizing your spending needs.

Here are seven steps to take to manage your money properly:

  • Understand your current financial situation.
  • Set personal priorities and finance goals.
  • Create and stick to a budget.
  • Establish an emergency fund.
  • Save for retirement.
  • Pay off debt.
  • Schedule regular progress reports.

 

Understand Your Current Financial Situation

 

Before you can start managing your money better, you need to know how much of it you have. “I don’t think you can move forward without knowing where you are,” says David Curry, a certified financial planner and principal and co-founder of East Paces Group, an investment advisory firm in Atlanta. He recommends people start with a comprehensive financial plan which can inventory your cash flow, income, savings, investments and more.

While a financial planner can create a formal financial plan for you, there is no need to hire someone to get started. The most basic step to understanding your current financial situation is to sit down and record all your regular monthly income and expenses, says Wendy Terrill, a retirement planning consultant and the founder and CEO of financial planning firm Assurance & Guarantee in Graham, North Carolina. “A lot of people are surprised when they put pen to paper,” she says.

If needed, save receipts for a month to determine where money is spent beyond major bills like rent, utilities and debt payments. For some people, it can be a wake-up call to realize how much is being spent on items such as groceries or dining out.

 

Set Personal Priorities and Finance Goals

 

“I think it’s all about having goals,” says Timothy McGrath, a certified financial planner and managing partner with Riverpoint Wealth Management in Chicago. Defining what you’d like to achieve with your money can make the process of creating a viable budget much easier. 

Create and Stick to a Budget

 

Writing a budget designating how your income will be spent each month isn’t necessarily hard for many people. Following it, though, can be a challenge. “That right there is the hardest part,” Terrill says. People may not have the self-discipline to limit impulse purchases, or they may feel too restricted by having to plan their spending in advance.

However, the reward for sticking to a budget is having cash available to spend on those items most important to you. What’s more, it will be easier to follow a budget that is written with your priorities and goals in mind.

If you discover there isn’t enough money to pay for everything you’d like, look for ways to whittle down expenses. While eliminating small, recurring purchases such as duplicative streaming services or takeout coffee is often suggested, Brodsky encourages people to think big. For example, “If you rent and your lease is up, move somewhere cheaper,” he says. As long as it doesn’t dramatically change your quality of life, making significant changes like this will have the most profound impact on your finances.

 

Establish an Emergency Fund

 

Part of how to manage money better is to have cash set aside for unexpected events such as a lost job, illness or broken car. “Everyone needs an emergency pot (of money) for three to six months of expenses,” McGrath says.

The best way to create this fund is to include savings in your budget. How much you save can depend on how much extra money you have available, but Terrill recommends putting aside at least 10% of your income into emergency savings each month.

 
 

At some point, you may want to retire, and that will be hard to do without a retirement fund. Social Security benefits only replace approximately 40% of your income, and many employers no longer offer pensions.

Workplace retirement plans such as 401(k) accounts can be a good place to save for retirement, since contributions are automatically deducted from payroll. Plus, many employers will match a portion of their workers’ contributions, further boosting retirement savings. There are tax incentives for these accounts as well. Contributions to a traditional 401(k) are tax-deductible, while Roth 401(k) accounts are funded with after-tax dollars but earnings withdrawn in retirement are tax-free.

For those who don’t have access to a 401(k) or other employer-sponsored retirement plan, an IRA offers similar tax benefits. In 2020, total contributions to IRAs can’t exceed $6,000 for workers younger than age 50 or $7,000 for those age 50 or older. According to Terrill, you should try to save 10% to 20% of your income for retirement.

Regardless of which retirement account is used, don’t make the mistake of selecting investments based on emotions. “Don’t let fear and greed dictate your investment decisions,” Curry says. Speak to a financial professional if you need help creating an investment strategy that matches your needs and goals.

Pay Off Debt

 

Having debt can get in the way of meeting financial goals. “I don’t want my clients to carry any debt except a mortgage,” McGrath says.

Since most debt accrues interest, becoming debt-free can be a long process if you are only making minimum payments. In some cases, it may help to consolidate high interest credit cards into a lower interest loan or line of credit. “You’re going to pay it off quicker, and you’re going to pay less,” Terrill says.

However, debt consolidation only works if you commit to living within your means going forward. Otherwise, you could end up with both a debt consolidation loan and a new credit card balance. If you do get a loan, choose one with the shortest term possible. “I never recommend going beyond three years because it (seems) like forever,” Brodsky says.

Those with credit scores below 680 may not be eligible for debt consolidation loans or balance transfers, according to Brodsky. In those cases, the best strategy is to concentrate any extra money in the budget on one debt, and once that is paid off, roll its payment into another debt.

 
 

Managing your money successfully is an ongoing process. “A lot of times, clients think they are doing a good job but how do you judge?” McGrath says.

It helps to schedule regular times throughout the year to evaluate your financial situation. McGrath says people should always know their income, savings, spending and net worth. Beyond those four numbers, use these check-ins to determine what progress has been made toward financial goals and whether any budget items need to be adjusted for the future.

 

Best Budget Apps

 

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This Blue Monday, family finances in Bexley and its surrounding areas are at breaking point according to a leading money advice charity

UNDER STRICT EMBARGO UNTIL 00.01AM 15th January 2018

• 29 personal debt currently managed by Excelling Community caseworkers in Bexley.
• 64 families and individuals currently being supported in Bexley and its surrounding area.
• Families in distress because of money problems encouraged to seek professional help.

As the post-Christmas blues take effect and credit card bills land on the doormat, many families in Bexley & Greenwich face a financial crisis this Christmas according to local debt advice charity Excelling Community which is part of Community Money Advice’s national network of advice centres where trained debt advisers offer free, confidential, face-to-face advice and support to help people find relief from debt and financial hardship. Statistics indicate large numbers of people are struggling with debt and money pressures, placing a strain upon family budgets, at a time of year when financial pressures are at their greatest.

The charity will feature on the BBC’s Inside Out programme which will focus on consumer debt problems tonight 7.30pm on BBC 1

Recent statistics from the Bank of England show unsecured consumer debt has increased by 19% in the past 5 years and currently stands at £201.5bn. Household debt has been growing much faster than household income and the Office for Budget Responsibility predicts unsecured household debt will reach 47% of income by 2021. Total consumer debt including mortgages is now over £1.5 trillion.

Lara Davies-Ero from Excelling Community, says:

“In the last year Excelling Community has helped [insert number] families struggling with debt and financial problems. Family budgets are often extremely tight and it is very easy to find debts spiral out of control, particularly when family circumstances change. Our trained advisors offer free, confidential face to face advice. Those struggling from debt tell us of the relief they find from talking with an advisor who can help them start to resolve the problems.”

“One of us had just lost their job and car, while the other was too ill to work. We have a school age family and had a massive debt, with no income – we were totally terrified that we would lose the house. When everything came crashing down, with no job and income, things couldn’t have been darker or more hopeless. The adviser was amazing! Firstly, she helped us face the reality of our situation, and went through all the figures with us. Then, she said that there was a way through all this, that there was hope and a way back to a debt free future. Now, four months later, our lives have totally turned around, thanks to the encouragement, practical support and advice. We still are working through the process to be totally debt free, but learning good money management has literally changed our lives! If you are struggling with debt like us, they can help you too.”

Contact: 07869114490


Excelling Community

Excelling Community is a registered charity in the UK & Northern Ireland. Charity no: 1168692

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