Can you help me define discipline? What is the literal meaning? What does it actually mean to you?
Discipline will be the foundation of your successes in life. Dedicating yourself to a job, relationship, or idea allows you to engage that thing or person with the best of your abilities. Discipline provides you with the greatest chance for success. Often, the most successful people, the ones we idolize, are the most disciplined. If I asked you who the greatest investor of all time is, chances are you'd respond with Warren Buffett. If I asked who the best basketball player is, you might tell me LeBron James. Two completely different individuals, yet very successful in their ways. Both have shown extreme levels of discipline - making sound decisions or practicing non-stop.
Why should your financial endeavors be any different? Why should you not institute discipline into your personal finance life? Trick questions. They shouldn't and you definitely should (There's a reason that many lottery winners end up broke! They have no discipline! But that's for another post). If you expect to learn discipline as your financial situation improves or you begin making more money, it'll be too late. Discipline forms habits. Habits are what help you make wise choices and are what keep you on track for your goals. Speaking of goals, have you defined any personal finance goals for yourself yet? Have you begun tracking your spending and saving? I know some of you have. But I guarantee others haven't. If you haven't, why not?
Taking the first step is always the most challenging. It can be frightening and you might not know exactly what you're doing. BUT FEAR NOT! You will get there. Everyone can. Not to mention, your bank account will thank you later.
Please bear with me. It is critical that you lay a foundation for yourself. I'm hoping to write something else this weekend, maybe talking about the "fiscal cliff" and what it means for you as it's a big news issue (and could have a noticeable impact on your paycheck!). Also, if you know anyone else who you think would enjoy this blog or needs the information, please pass it along. There's nothing better than free information!
For now, I'm going to leave you with a few quotes from the book I'm reading. I hope you find some encouragement in these words!
"The message delivered with unrelenting enthusiasm by our culture is, 'You can be happy without discipline. Do whatever you feel like doing and you will be happy!'"
"There are four major aspects of the human person - physical, emotional, intellectual, and spiritual. When we eat well, exercise often, and sleep regularly, we feel more fully alive physically. When we love, when we give priority to the significant relationships of our lives, when we give of ourselves to help others in their journey, we feel more fully alive emotionally. When we study, we feel more fully alive intellectually. When we come before God in prayer, openly and honestly, we experience life more fully spiritually. All of these life-giving endeavors require discipline. When are we the most fully alive? When we embrace a life of discipline. The human person thrives on discipline"
~ Rediscovering Catholicism by Matthew Kelly
Now that my financial life has become settled and somewhat predictable I have begun using financial tools (Mint, WF Spending Reports, and my own excel spreadsheet) in an attempt to finance my life appropriately. The current question I am wrestling with is should I pay off my student loans before giving to a 401K because of the rates? How do these rates compare?
ReplyDeleteExcellent question. Also one that's fairly straight forward. I'm guessing the 'rates' you mean are the interest rate on your loans vs. the potential rate of return on your investments. The historical, long-term rate on investments is 10%, which is usually higher than interest rates on student loans. But there is something about being debt free. That leaves a personal decision between lifestyle and not-guaranteed, potential return.
ReplyDeleteBUT, since you are talking about an employer's 401k, that's different. Most employers will match your contribution up to a percentage of your paycheck. This is FREE MONEY that helps you towards retirement and SHOULD NOT be squandered. Only if by you contributing to that 401k your loans would become unmanageable, should you then pay them off and forego the 401k contribution