eBusiness Weekly
Dr Kudzanai Vere
The journey to financial success cannot be fully and completely written without the mention of financial discipline as one of the most important mode of transporting anyone to financial success. When it comes to finance, be in-disciplined at your own peril.
Let me start by giving some definition of financial discipline so that we are all be at the same page.
Financial discipline is the practice of developing a set of rules to achieve one’s financial goals. It involves making informed decisions for investing, spending and saving. It is a skill meant to make one have full and unfettered control of their financial resources.
Human being are natural spenders. We have a high propensity to consume that we have been accumulating and thus the need to learn ways of toning this cancerous behaviour down and this can only be achieved by the subject of financial discipline. I will share on the 10 practical ways to financial discipline.
1. Situation analysis.
In my first book Becoming a person of impact: The six pack approach, I talk about the cardinal issue of discovering yourself if you want to succeed. Understand your status quo with regard to money issues before you even start thinking of strategising around it. If you don’t know where you are, it is very difficult and sometimes impossibly to reach where you want to go. So whatever financial ambitions that you habour, start by investing in understanding your current status. Thoroughly analyse your situation and be truthful.
Know your spending habits, your current debts, consumption patterns. In summary you need to categorise your spending and your earning potential and see whether all these speaks to where you want to go.
2. Set up a realistic budget
We can’t successfully talk of discipline without a budget. A budget is one tool that assists individuals and even organisations to be disciplined. You can spend beyond the stated unless otherwise.
The starting point is to determine how much comes in before thinking of how much goes out. This is where the majority get the maths wrong.
You don’t start by spending before earning. Most people are languishing in debts because of failure to master this simple art. You need to discipline yourself to live within your means (sources of income). So setting a realistic and practical budget is key in the financial success equation.
From my various conversation with people on the issue of financial literacy and discipline, I have discovered that very few people are disciplined to have a budget that guides their sourcing, spending, investing and saving. In simple terms, your budget is your financial plan.
We just spend yes as we wish but without keeping track of how much went where?
Most of us will be shocked when we really do an audit trail of the moneys left in the pocket, wallet or bank card and what you used them for just in one year. You might discover that you scratched almost a quarter of it in the form of juice cards. Buying airtime for useless calls and needless surfing the internet. Money that can build a whole foundation of a cottage.
In your normal senses, you can’t budget that much for such unless there is business in doing so. A budget allows you to query and question some of these amounts and allocate money where there is productive need.
3. List all your debts and work on settling them
There is every good breath of oxygen when you live a debt free life. I know very well that it’s not that easy to get to such levels but one must consciously and continuously work towards that. The major reason why we accumulate debts at personal level is leaving other people’s lives.
One of my friends Advocate Arthur Marara always say live within your means (Tanha dzaunosvikira). Most of us we want people to see us as if and yet we are not. We create unnecessary holes and gaps that will be difficult to fill.
4. Cut down on spending
Adjust your spending levels to be within your established budget as this normally lead people into unnecessary debt.
Have you ever taken some time to put value to the things that you throw in your bin every day? I know most of you reading this article haven’t and it seems as if its something unusual. Once you ascertain that value, that the same value you must cut your spending with. It literally means you are buying more than you can consume and that syndrome also extends to the kitchen, cooking more than people can stomach.
We have people who just have a tendency of wanting to buy for the sake of it. Do you want to use it now, no, so why spend money on it now rather than investing elsewhere? If it was in the academic world we would say most of us have PhDs in spending and mere certificates in making money. Let’s invert this.
Let’s all have PhDs in taking money and certificates or diplomas in spending.
The best way to cut on spending is to stick to your budget. So a budget is an imperative tool in this whole issue of financial discipline.
Conclusion
It calls for a high level of financial discipline to attain financial independence. These 10 practical steps when put to use can activate a financial giant in you.
The writer, Dr Kudzanai Vere, a sought after transformational speaker in the areas of financial literacy, organisation development, business re-engineering, leadership development and entrepreneurship. He is the Managing Partner at Kudfort Zimbabwe, an accounting, forensics, auditing and business advisory firm. He can be contacted on [email protected] <mailto:[email protected]> or +263719592232
