Financial goals are never a short-term thing. People don’t simply wake up one day and decide that, yes, today they’re going to be financially independent or today they’re going to be debt free.
The truth: People who achieve financial goals are people who consistently apply a number of skills over time. They get up in the morning and go through a normal day just like anyone else. The only real difference is that they apply a few skills throughout their day to shape the choices they make.
This is completely true in my life. I’m far away from achieving my biggest goals, but I know that in order to get there, I have to apply some real skills today. I say no to a lot of temptations. I remind myself to not give up on things that don’t have immediate results. I focus on the task at hand. I add and subtract a lot of figures quickly. I think about the long-term future and I make plans to get from where I’m at now to where I want to be. I do things myself, recognizing that my success in life is virtually entirely up to me.
If I don’t do those things today, I’m not going to achieve my goals tomorrow.
So, how do those skills actually break down? Here are seven specific skills that I apply every day on my financial journey. I believe these skills are vital to anyone who is working on their own financial journey, wherever it may lead.
Skill 1: Willpower
The ability to simply say “no” to a temptation when it doesn’t have a long-term net benefit.
I’m tempted to buy things all the time. I’ll see tasty things at the grocery store. I’ll see fun things at the hobby store. I’ll see countless things online. On a very surface level, I’ll want those things and, if I’m not being thoughtful about it, I’ll add those things to my cart and spend money that I shouldn’t.
I’m also tempted to spend time in less than useful ways all the time. I’ll think about an interesting website or an interesting computer game and then find myself dropping half an hour on those things.
I can talk about all kinds of little tips and tricks that I use to keep those temptations at bay, but they really all boil down to one thing: willpower.
Willpower simply means that I’m able to make the internal choice to spend my money and my time in a way that’s not the most pleasurable in the short term. Willpower means that I don’t eat the tasty but less healthy food. Willpower means I don’t buy that thing that I want right now but will forget in a few days. Willpower means I turn off that fun game and get back to work.
What comes from willpower? Less money spent on silly things means more money in the bank. Less time spent on unnecessary things means better produced work and more genuine free time. Less unhealthy food eaten means a healthier body.
The best way to build willpower is through practice and mindfulness. Try to focus on one particular thing that you’re trying to resist in the coming days and weeks. Keep that sense of resistance in your mind as much as possible and then when choices present themselves, resist the bad options.
Along with that, try to avoid constantly putting yourself in situations where you might be tempted. Stop visiting websites that trigger your urges to spend. Avoid stores that cause similar responses. Cut back on your media intake, particularly from publications and websites that do little but inform you of the latest and greatest things.
Skill 2: Patience
The ability to not give up when the desired outcome doesn’t appear immediately.
I’ve been working on improving my financial state for almost a decade. That seems like a very long time, particularly when you consider I haven’t reached my big goal yet. Without a healthy dose of patience, I simply wouldn’t have made it this far.
I have a big impatient voice in my head that’s constantly telling me to stop bothering with financial progress, that I’ll never make it, that I should just “enjoy life right now” – as though “enjoying life” comes from throwing money at things that have no lasting positive impact on my life.
That voice shouts at me that I’ve been patient and I still haven’t reached my goals. I’ve worked and worked and worked at it, but what do I really have to show for it? Why not enjoy life now?
When I listen to that voice, I virtually always end up regretting it. It almost always amounts to a step or two back from my goals rather than steady progress toward my goal.
The problem is that the voice is completely wrong. If I compare my life now to my life in 2006, the difference is like night and day. I was in debt up to my ears back then. Today I’m debt free. Back then, I had basically nothing in the bank. Today, I have a lot in the bank – maybe not enough to walk away from work, but more than enough to support me and my family through a lot of trials.
For me, a big part of patience is to simply be mindful of the great progress you’ve already made, even if it doesn’t mean you’ve achieved your final goal. I find that when I reflect on the progress I’ve already made toward the goals I have in life, I recognize how much progress I’ve actually made and this redoubles my patience toward the unachieved goals I still have.
Another big part of developing and maintaining patience comes from stopping before I make any financial move and thinking about it for a moment or two. Is this purchase really bringing anything of value into my life? Does it take away from the big things that I desire? Isn’t my life already pretty good without this purchase? Most of the time, that thought process convinces me to put that item right back on the shelf
Skill 3: Focus
The ability to finish a task with quality results without being easily distracted.
It’s impossible to make financial progress without a healthy income. If you’re not earning good money, it’s pretty hard to spend significantly less than you earn.
The question, then, is what strategies a person can use to earn a good income. I’ve found, more than anything else, that being able to focus and bear down on a particular task to completion is perhaps the most valuable skill anyone can have when it comes to earning money.
That skill isn’t as easy or as obvious as it seems. Many people can push through minimal completion of their job tasks, even through lots of distractions, so they don’t see focus on important tasks as a big deal.
However, being able to bear down on important tasks and finish them in a quality way brings several benefits to the table.
First, it condenses the time spent on a task. If you bear down and focus singlemindedly on the task at hand, you’re going to get it done much faster than if you constantly interrupt yourself for other things.
Second, it increases the quality of the result. When you really focus on something, you’re much more likely to see ways to improve what you’re doing, bringing about better results which reflect well on you.
Third, it leaves larger blocks of free time for other tasks. If you finish a project more quickly, you now have a larger block of uninterrupted time to actually do something worthwhile. If you have a five hour project in front of you, for example, you might spread it out across eight hours with distractions, or you might bear down and complete it in five hours, giving you a three hour block of freedom.
Finally, it allows you to take on bigger tasks than before. If you’re able to effectively focus, tasks that seemed out of reach in the past suddenly become possible. This obviously translates into being more effective and more valuable at work.
If you want one magical ingredient for being successful in your career, try building focus. I find that the Pomodoro technique is a really powerful way to build focus in the modern age, as it revolves around alternating periods of focus (25 minutes long) with periods where you’re free to be distracted.
Skill 4: Basic Mathematics
The ability to calculate and understand percentages and dollar figures.
Eventually, if you’re serious about your finances, you’re going to need to be able to do some number crunching. The ability to add numbers, subtract numbers, multiply numbers, divide numbers, and use percentages with confidence and precision is almost a requirement when it comes to really understanding your financial state.
Are you comfortable adding up a column of numbers? Are you comfortable calculating a percentage, or the dollar amount that is a certain percentage of another dollar amount? Can you handle figuring up simple examples of compound interest? If you’re not fully comfortable, do you know how to use tools to handle all of these things?
If you can’t answer “yes” to a lot of those questions, understanding your financial state is simply going to elude you. You’re going to find yourself simply trusting others when it comes to your financial situation and, to put it lightly, there are a lot of sharks in the water when it comes to your money.
In order to be able to assess whether, say, an insurance package is a good deal for you or a car loan is a good deal, you need to be able to run the numbers on your own, whether on scratch paper or with an electronic tool of some kind.
Yes, this is a skill that many people pick up and master in school, but not everyone does. Natural aptitude is part of it, but so is quality instruction, something that not everyone receives.
How do you master this skill if you don’t already have it? After reviewing a lot of different online tools, I found that the math section at LearnFree.org does a great job of teaching the basics, while the tutorials at BetterMoneyHabits.com offer a very gentle introduction to the math behind personal finance.
Skill 5: Planning
The ability to come up with an ordered series of steps taking you from where you are now to where you want to be.
You know where you’re at. You know where you want to go. But how do you go from here to there?
Most people can generate some kind of a plan to move their life to where they want to be, but it takes a lot of time and thinking to come up with a good plan, one that’s realistic and actionable and yet actually moves you toward that goal at a healthy pace. It means coming up with things to do each day. It means coming up with milestones to achieve so that the destination doesn’t feel too far away. It means knowing how to handle it if things don’t go according to plan.
That’s a lot harder. It’s something that I struggle with myself. Yet, I’ve seen over and over again that having a good plan is key, following that plan is also vital, and knowing how to revise that plan to keep it all realistic is also really important.
Like many skills, your planning skills grow stronger the more you use them. The more you plan, the more natural planning becomes and the easier it becomes to execute the plans you create, too.
I recommend starting by making plans for some of your larger tasks in your day-to-day life. What’s your plan for that big project you have in your head that might take a day or two but you’ve been putting off? Can you break it down into small pieces that are easy to do one at a time? Can you perhaps do the first step tonight?
Once you start addressing goals in this fashion, it becomes easier and more natural to address other life goals in this way. You’ll soon start seeing your entire life through this kind of lens.
Skill 6: Future-thinking
The ability to consistently choose actions that are beneficial over the long term over those that have only short term benefits.
A lot of the choices we make on a daily basis wind up essentially being a choice between the short term and the long term. Buying a bottle of soda is a short-term (that’d be tasty) versus a long-term (it’s unhealthy and kind of a waste of money) decision. Focusing hard on a task at work is a short-term (it’d be more fun right now to look at a website) versus a long-term (focusing now makes a better end product and impresses my boss) choice. Almost everything is a short-term versus a long-term choice.
Every short-term choice you make will bump the quality of your life at this moment, but is neutral or negative down the road. Every long-term choice you make improves the status of your life down the road, but is neutral or negative right now. Make enough long-term choices and your life will simply become better over the long term.
One of the most powerful skills you can learn is the simple ability to think about the long-term benefits of each choice in the moment. Often, the short-term benefits are obvious enough and tempting enough to simply shout out the long-term benefits of other choices. Don’t let that happen. Intentionally think about the long term.
For a long time, I found it useful to ask myself, in the heat of the moment when making a decision, which option will put me in a better place a year from now, or five years from now. When you ask yourself that question sincerely, many choices quickly fade away because it’s obvious that they have no positive impact – and often a negative impact – at that time scale. Almost all buying decisions become clearly in favor of spending less, for example.
That’s not to say that you always need to make the long term choice, but when you’re mindful of the differences and benefits of both the short term and the long term and then nudge yourself even a little toward the long term side, you’ll start really seeing the benefits over time.
Skill 7: Independence
The ability to do things for yourself as often as you can without relying on others.
As independent as we all like to think that we are, we do often rely on others for the basis for our decisions. We rely on our life partners. We rely on our parents. We rely on insurance salespeople or car salespeople. We rely on television programs, on websites, on magazines. Rather than making a decision on our own, we hand control over to those things and allow them to make choices for us.
Often, that’s the easy way to go. It absolves us from having to actually think about, come up with a choice, and then stand by that choice. It gives us an excuse if something goes wrong, too.
The problem is that much of the time, the things to which we hand over control aren’t necessarily making choices that are in your best interest. Instead, those things often make choices that are in their best interest, which may or may not overlap with your own.
Independence simply means standing up for what is in your best interests, especially when that doesn’t necessarily align with what a parent or an insurance salesperson or a car salesperson is telling you. It means more work, yes, but it also means that when a decision is made that impacts your life, your life is a primary consideration in that decision.
You can practice this skill by simply stepping away from those other influences and making a decision based on what is best for your life and then standing up for that choice. It can be hard to do this, but it’s one of those things that, once you do it once, it becomes easier and easier to become an advocate for yourself.
Taken as a whole, these skills provide a powerful underlying basis for financial success in anyone’s life. They help to ensure that you’re in control of your own destiny, that you’re making choices that benefit your future, and that you understand why you’re making those choices. Those elements are key elements for financial success – and, frankly, any kind of success in life.
None of these skills are particularly challenging on their own. Mostly, they just require that a person be mindful of what they’re doing in the moment and willing to consider the outcomes of the choices that are on the table in front of them. The more mindful you are of those choices and the real impact they’ll have on your life, both now and later, the better off you’re going to be.
Be mindful of these skills. Strengthen these skills. Understand these skills, and know when to use them. Your whole life will benefit.