Know Your "Why" To Build Good Financial Habits
How to stick to your financial goals? Understand your “WHY”
Most of us are aware of the habits that we should implement to build wealth and achieve financial freedom: Maintain an emergency fund, pay yourself first, invest, avoid lifestyle creep, avoid consumer debt. The list could go on.
But why is it so difficult to stick to these habits?
The reason is that many of the habits that lead to financial success require discipline, patience and most importantly foregoing instant gratification for delayed results. And in today’s society everyone wants the quick route to success, financial or otherwise. If we don’t see immediate results, we often give up.
That is why in 2018, American’s spent a total of $76.3 billion on lottery tickets.
All in the hopes of striking it rich, which as we know, does not happen for most people when playing the lottery. Just imagine if rather than spending that money on a get rich quick scheme, people were to save and invest that money. They would be a lot better off I can tell you that.
So how do we become more disciplined in our financial decisions, knowing that we are foregoing instant gratification for a better tomorrow?
By developing a reason…our personal WHY. A reason that is stronger than the instant gratification that we feel when spending money and will help us stick to the habits that will help improve our future.
Two of my favorite books on the topic of habits and the impact they can have over time are:
Your personal experience and family history with money will likely impact your why and your ability to remain disciplined in working toward your financial goals.
Let’s explore three financial objectives and the why that might lead you to remaining disciplined in their pursuit.
Saving For Your Kid's College Education
Your desire for your kids to graduate college debt free needs to be stronger than your desire for a new car, larger house or dinner out several nights a week.
If you graduated with student loans then you may not mind if they do as well. Conversely, your experience of having to pay off those loans could be your reason for why you want to make sure they don’t have to go through challenge and start off on better footing than you did.
If you were fortunate to have your college education provided for then you are likely to want the same for yourself as you have firsthand experience of the benefit it provided.
Planning For Retirement
Your upbringing and your parents’ retirement experience will likely impact your decisions in this area.
If your parents had to work well beyond their desired retirement age then that might be enough motivation for you to do whatever it takes not to let that happen to you.
You might also have that same motivation if you saw your parents retire on their own terms and enjoy decades the way they wanted to, due to their decision to make smart, disciplined financial decisions.
Take a look at this chart to see the impact that consistent, disciplined actions can have on your journey to retirement.
Paying Off Debt
Your desire to pay off debt may likely be due to seeing the high interest rates you are paying on a monthly basis and the impact that has on whittling down the balance.
Or perhaps you hate signing into your account and seeing a large loan balance, regardless of the interest cost.
In either case, the negatives of debt, particularly high interest rate debt, have to outweigh the benefit that you received from accruing that debt which is likely an object that was outside of your financial means.
Ultimately, you need to spend time figuring out a why that is strong enough for you to remain committed to.
Because trust me, staying disciplined in your financial decisions will be very difficult and there will be plenty of temptations trying to derail your progress.
These are just a few examples of financial goals that money people have and the WHY that you can associate with them to become more disciplined in sticking to each.
Your reason for making a short-term financial sacrifice for long-term financial benefit needs to be compelling enough that you still with the habit even when it becomes difficult to do so, which it will.
Take the time to get clear on WHY you want to accomplish certain goals. It may be a difficult process of self reflection, but it will be worth it when you finally achieve what you are working toward. Keep your eye on the long-term and don't give up when times get tough.
Crest Wealth Advisors can help you gain clarity on the financial goals you seek to achieve, create a plan for reaching those goals and help hold you accountable along the way to ensure you are making progress. Schedule A Call today to learn more about how we can assist you in achieving your financial goals.