6 WAYS TO DEVELOP FINANCIAL DISCIPLINE

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Ryan Holiday is an author, entrepreneur, and content creator. 

His Youtube channel, Daily Stoic, has 822k subscribers and regularly produces excellent video content about the values of stoicism and its usefulness in modern life. His books expand on these ideas.

Discipline is Destiny: The Power of Self-Control by Ryan Holiday is a recent work about the stoic virtue discipline. It reads like a series of blog or newsletter posts, covering the impressive discipline of individuals throughout history. The life-tested proof of these examples was inspiring.

The example provided by Lou Gehrig as he played each day for 2,130 consecutive professional baseball games, often in immense pain. Teddy Roosevelt committed to live the “Strenuous Life” despite physical limitations as a young man. Toni Morrison wrote each morning in the dark, producing countless novels all while being the single mother of two boys.

The discipline exemplified by these individuals and countless others in the book is impressive. The commitment to self-control in certain areas of life or across life at large is aspirational.

Because so many activities require discipline, it is a fundamental characteristic in life generally. Those with a great deal of discipline will find the path to success much easier, and those who struggle to stay disciplined will find the path to be rocky and steep.

Money is like discipline. In the same way discipline is a foundational trait impacting nearly all areas of life, money will have wide-reaching impacts across life. Money infiltrates essentially every relationship whether personal (e.g., with your spouse, children or friends) or impersonal (e.g., your job, your lifestyle, or your hobbies).

Money will be a fuel and resource to enjoy life, or it will extinguish and dampen some of life’s greatest joys.

Once again, discipline has similar effects. It will accentuate and amplify the good things in life. The lack of discipline creates a steep downward trend, stealing from the future to satisfy the present.

Like Ryan Holiday titled his book, your discipline will be your destiny.

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Discipline is the Key

Without discipline, little can be accomplished.

It will be difficult to save for retirement without discipline. You will have trouble prioritizing investing and building wealth without discipline.

The ability to delay gratification is based upon discipline. Even the opportunities you will find to purchase real estate or buy a cash flowing business will be founded upon discipline.

Prioritizing your long-term goals and deciding what retirement will look like for you will be based, in part, upon discipline.

Maintaining your health and accomplishing all you had planned for retirement will require discipline carefully applied over many years.

Discipline is an intrinsic trait. You can intentionally grow to be more disciplined, but you cannot rely on others to supply discipline in your life. There is little anyone else can do to promote discipline in you other than beg and plead. Another’s example of discipline may provide a framework and even motivation. 

In the end, discipline and its corresponding actions must come from within. Discipline is the key to unlocking so many things in life, and you hold the key!

Invest in Every Stage of Life

No matter the stage of life, a disciplined individual will invest.

There is an excuse in each phase of life that could hold you back from investing. “I don’t have enough money right now,” or “I will start eventually.” The list of excuses can be endless.

Early in life, discipline will be key in the first steps to building wealth. You’ll need a dose of discipline to start investing and overcome the initial hurdles to create an account and make deposits. It will require discipline to invest when it feels like there isn’t enough money to go around. 

Later on in life, you may encounter new avenues of investing. If you are interested in purchasing real estate or buying a business, discipline will be required at every stage of the process. Establishing an investment process, examining the deal, and actually managing the property/business will all require discipline.

The disciplined person finds a way to invest and build wealth in each stage of life.

Invest No Matter the Market Condition

The market is a fickle friend. Sometimes, it is like a rocket ship and account balances grow quickly. At other times, the market is like a millstone and grinds dollars into dust. 

For the first time in a long time, everyone has experienced a relatively prolonged market downturn. The past year has provided a new-to-some experience where the market doesn’t always go up or rebound from a short-term trough.

There are some who may grow fearful when the market is turbulent. The temptation to sell assets, withdraw funds, and pull out of the market is felt more intensely when the market is down.

A disciplined investor mostly ignores market conditions.

It can be disheartening to watch an account balance fall from month-to-month or quarter-to-quarter. The statement won’t ever lie about the market’s impact on your holdings. You must take the punches the market regularly throws in stride.

Just keep coming, knowing that your plan anticipated some volatility in the market. You are a disciplined investor who understands the market may be wild in any short period. Over a long period of time? 

The market is relatively steady. In the end, good habits and discipline will allow you to take advantage of the market’s long-term track record.

Live Off Less Than You Make

Although budgeting and expense tracking is not a core focus of this newsletter, this timeless adage deserves recognition. 

In a world with endless ways to spend money, refusing to spend excessively can be incredibly difficult. Essentially everyone loves to spend, or at least experience the result of buying something new or purchasing an experience. 

The dopamine hit from spending money and the exhilaration that follows is real. It is difficult to resist the temptation.

Delayed gratification requires foregoing a benefit in the present for an even better/greater gain in the future. By spending less now or delaying desires, you practice delayed gratification. There are few characteristics tied more closely to success in life than the ability to practice delayed gratification.

Discipline and delayed gratification are closely related.

The disciplined individual will prioritize the future instead of the present. 

This doesn’t mean you will never buy something new or purchase an item from your wish list. It is healthy to spend money on things that actually provide happiness or uplift your life as a whole.

Applying discipline to your spending habits means living within the bounds of your income, making high-satisfaction/ROI purchases, and occasionally practicing delayed gratification.

Find New Ways to Invest

Many people understand the benefits of investing in the market. There are many advantages to mostly passive investing in broad ETFs or mutual funds.

1/ Simple2/ Low cost3/ Low entry barriers4/ Low attention requirements

If you only invested in the market via ETFs or mutual funds, you could easily become wealthy. After all, there are countless “401(k) millionaires” and other individuals who found immense success by investing in the market. It is the simplest path to wealth.

If you have excess funds to invest or a desire to invest in a more hands-on way, you may consider other avenues to put dollars to work. Investing in real estate and in privately held businesses are common methods to build wealth outside of the market.

Simply becoming knowledgeable enough to examine a deal and invest in these alternative assets will require discipline. The market is very simple, but investing in a commercial real estate deal or in a business is more difficult and complex.

If you have proven to be a disciplined investor in the market, you may consider taking a step toward other alternative investment solutions. In managing real estate or operating a business, intense discipline will be required of you.

Set Challenging Long-Term Goals

Any goal requires discipline. The difficulty of maintaining a short sprint of a weekly or even monthly goal pales in comparison to the long-term discipline required to become financially successful.

There are a few examples of those who found wealth quickly. The Silicon Valley entrepreneur, a professional athlete, or another famous individual who cashes out after a few years is probably an over-representative example in our minds. These paths to wealth are less common and often full of other hurdles.

The more common path to wealth occurs on a much longer time horizon. In most cases, wealth is built over decades.

A person saves in their 401(k) and Roth IRA over their entire working career, slowly building wealth over time. Someone buys a piece of real estate or a cash flowing business, then re-invests in similar assets or in the market. In either case, the disciplined focus creates wealth in the aggregate. 

Wealth is rarely built in a day, week, month or year. It is the cumulative actions over a long period of time that build success and create wealth.

Because of this, you should set long-term goals. The best goals and targets are reachable but challenging. 

Don’t set a target that can be accomplished if you keep the status quo or do simply what is generally expected. Be aggressive and set goals that will simultaneously stretch you.

In the end, a goal like this will be more rewarding and will require the careful application of discipline.

Teach/Enable Others to Invest

When you achieve some level of success and wealth, it is easy to sit back and relax. The relaxing days on the lake or an easy round of golf provide great comfort/satisfaction but can make life too easy.

It takes some amount of discipline to say, “I have come a long way, who can I lift up around me?”

Teaching others about the path you lived can be mutually beneficial. Mentorship is a two-way street - often the mentored and the mentor derive serious benefits from the relationship.

When you teach someone else about what you have learned about building wealth, you begin to understand the process and characteristics required in a more real sense. 

You can share all that you have learned about investing and building wealth with someone else. This might make their path just a bit straighter or slightly shorter.

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TL;DR

Discipline is a key characteristic in life and investing.

Because money is such an important component of life, there are many ways to practice discipline when it comes to investing and financial life generally.

When it comes to building wealth, discipline will have an outsized impact and importance.

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What ways have you developed financial discipline? Where could you enhance your life and wealth building journey by developing even more discipline?

Share this post with someone you know! Perhaps they can be an accountability partner or a point of inspiration on the path to wealth.