What Is Your Single Best Piece of Financial Advice?

“Your Ivy League Future”

I glanced at the sign on the conference room door and thought: wow- that sounds pretty good. I’d like to be attending that meeting…

We all have aspirations.

To get out of debt. To be able to pay for an emergency, like a car repair (smaller stuff).

Then there’s bigger stuff, like buying a home, taking a dream vacation, or retiring early.

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Your aspiration may be to start a business- maybe take that hobby and make it a full-time gig.

So, my single most effective piece of financial advice is:

Self-discipline.

We all know- generally- what we should do

Like many aspects of life, we know- at least in a general sense- what we should be doing financially. We’ve heard for years that we should create a plan, and work with an expert, if we don’t have a background in finances. We should save and invest money each month, and consider the amount of risk we’re comfortable taking.

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You know, the personal finance greatest hits.

But, just like diet and exercise, many people just can’t pull the trigger and do it on a consistent basis. Gyms fill up in January and empty out by March.

We just don’t have the self-discipline. But we can change that.

A purpose

The classic book Psycho-Cybernetics explains that it takes 21 days to changes a habit. That takes effort, and you need to be motivated to make that effort. What can give you the self-discipline to change your personal finances (or go to the gym three times a week) is a purpose.

The purpose has to be a bigger influence over you than the idea of not changing. In other words not changing becomes more painful than changing.

And I use the word “pain” for good reason.

I can say from personal experience that financial problems suck. They can damage your health and your relationships.

At some point, the pain of having financial problems is worse than the pain and uncertainty of not changing.

So, what’s you reason for improving your finances?

Get specific- and write it down somewhere. Once you find your reason, you’ll be able to implement the plan listed below.

Create a budget, and move funds into a savings account

Create a budget, even if that budget is simply on notebook paper.
Separate your expenses between fixed and variable, and take a hard look at your variable spending.
Take steps to cut your variable expenses each month and put the amount you save into a separate savings account.

Monitor your spending and your budget

Consider using a budgeting app to monitor your spending.
Set up a separate bank account to discipline yourself to save.
Save 5% of your monthly gross income.

Use a retirement account to invest- through an employer, or on your own

Carefully review each retirement plan offering from your employer.
Ask about the tax-deferred investing component of your firm’s retirement plan. Do your investments grow tax-deferred?
If you’re self-employed, ask financial advisor about your investment options

One last thing: Read The Richest Man In Babylon. It’s a simple- yet powerful- book on savings and investing.

As always, check with a financial advisor and a CPA for more specific advice.

Good luck!

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl

This post was originally posted on my Quora page. This post is for educational purposes only.

Image: Bullseye, Jeff Turner CC by 2.0