No discipline and can’t save? No problem!

Do you lack the discipline to save? So do I, but discipline is nearly irrelevant.

When I was a financial adviser, I enjoyed sitting across from people and peeking into their financial closet. It felt like I was looking at people's darkest secrets: how much money they had, what they earned, how they invested.

I'll let you in on two secrets:

1) Nearly everyone is messing up some of their financial life, and they know it.

2) Even wealthy investors struggle with some basic concepts.

And here's a bonus third secret:

3) People usually hired me because they didn't think they had the “discipline” to save on their own.

The funny part of this story: it doesn't take discipline to save.

Maybe you can make a case for “discipline,” but I can't. You certainly need energy and motivation to decide it's time to begin securing your financial footing. You might need patience to study what methods of saving are available. Discipline? Overrated.

Contrary to what you may have been told, a wealthy person's secret weapon isn't discipline; it's systems.

My wealthiest clients who built fortunes without the benefit of an inheritance were systematic investors. They generally made money doing something other than investing and were passionate about that other task. Whether it was entrepreneurship, engineering, being a physician (though generally my physician clients weren't rich; they only appeared to be rich), each spent far more time earning money than shepherding it and were great savers because they'd created alerts, spreadsheets and applications to quickly help them manage their financial lives.

One client couple, Don and Karen, came in to meet with me because, according to Karen, “We can't save.”

I pointed to their financial statement. “you have $450,000 in your 401(k) plan and you're 35 years old! Of course you can save!”

“No,” Karen retorted. “We can save in a 401(k), but if you put money in our hands or our checking account, it vanishes.”

I'm sure they thought I was a genius when I uttered the next phrase: “Well, why don't we organize your outside savings to act like your 401(k)?”

I'm a flippin' rocket scientist.

I joke, but you may have similar problems. If so, ask: where have I built good systems and how can I parlay that skill into other areas of my financial existence?

Here are some some simple systems to get you rolling:

What tools should I use to get out of debt?

Debt management isn't about finding a magic tool, it's about the system. So the answer is whatever tool you'll actually use is the one that's the key to success. You don't lose weight by skipping from diet to diet, and you won't save a dime going from tool to tool. Find one. Stick with it.

If you like apps, I like fun sites like Payoff or Ready For Zero. If you don't want something electronic, try Dave Ramsey's debt snowball. If the idea of the debt snowball's sub-optimal interest pay down drives you crazy, pay the top interest rate first.

I love fights about “which one is best.” Working with over 150 families, I'll tell you which is best: the one that you're going to actually use.

System: Find a tool to pay down debt, and use it religiously.

What is best for my budget?

Spreadsheets are great for a nerd like me, but my spouse, Cheryl, falls asleep. We use Mint to budget because it's easy to use at our weekly meeting and alerts us to problems we might have missed along the way.

The weekly meeting might be one of my favorites. By holding a set weekly agenda, we're able to stay on top of our financial picture together. In most couples I counseled who struggled, one partner generally had a finger on their financial pulse while the other was in a fantasy land. By holding weekly budget meetings, you'll clear up your budget problem in a hurry, even if you don't track expenses.

Systems: Weekly budget meeting. Mint. Spreadsheet. Notepad.

How about getting money saved?

If you have direct deposit, use it to funnel money into your savings account instead of your checking account. Transfer money into your checking account to spend. Most people suffer from “I can't save” syndrome because they want extra money in their checking account “just in case.” I've found that you can use psychology to your advantage here. By directly saving money and then transferring it to spend, you're more likely to leave your cash alone.

What about setting up and monitoring investments?

You aren't alone if you're a poor investor. Many people admitted to me that they struggled with this. Worse, they were often intimidated by advisory terminology and CNBC jargon.

It's OK to admit that you're not going to be Warren Buffett with your investments. It's OK to say, “I'm not going to be great at this,” but at least use tools to become competent. Luckily for you, this thing called the Internet exists, and by using it, you can find some well-proven tools to help. Morningstar is a wonderful resource to quickly browse through 401(k) options and avoid pitfalls. Jemstep charges starting investors zippo to correctly diversify your investments (they do charge for larger accounts, though), and companies like Betterment will do it all for you in a proven, safe manner. There's no excuse to stink at investing, even if you want nothing to do with it and don't want to find the perfect financial adviser.

How do I make it work better?

Many people brought boxes full of paper into my office. Worse, some would show me as many as 40 different screenshots of their many online investment houses.

When you take a trip, do you drive one car or four? How easy is it to follow investments when you have to pull up five different screens to see what you own? Find a centralized place to review all of your investments together. Cut the time it takes to review your portfolio. Fewer windshields mean more time concentrating on your destination and less flipping between screens.

By setting up great systems you can laugh off your lack of discipline. Alerts, apps and meetings can rule the day. The only discipline you need? That would be the discipline to follow your system, and if you can't do that, well, maybe you are destined for failure.

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Pauline
Pauline
7 years ago

You are everywhere Joe! I use automation for bills and savings alike. Everything disappears from my main account at the beginning of the month, including enough to cover my different savings goals (holiday, long term…) then whatever is left on the account is mine to spend freely during the month. Doing it the other way around and saving at the end of the month whatever is left would mean less money saved, and the trouble to manually do all the transfers.

Thomas | Your Daily Finance
Thomas | Your Daily Finance
7 years ago

Never thought about it that way but it makes a lot of sense. Everything that I have done whether it be learning something, be successful or saving comes do to me having system in place that I follow. Like you I really like spreadsheets and data points. Automation is my system for saving while my weekly calendar keeps me in check with my tasks. Those are just a few of my systems. We can’t save!!! Thats funny considering they have 450K at 35.

Sam
Sam
7 years ago

I use a lot of automation for savings. And we also move that money “off site” into what is now CaptialOne 360 (formerly ING) which makes it harder to access and only I have access (Mr. Sam does not).

What we do is set up our savings goals at the beginning of each year then I work on setting up the auto transfers. Works pretty well. We also do our savings before we do our spending.

My Financial Independence Journey
My Financial Independence Journey
7 years ago

You need to have at least enough discipline to track your spending and income. If you don’t know where your money is going, you’ll never be able to control it.

Joe Saul-Sehy
Joe Saul-Sehy
7 years ago

I don’t think so. Maybe you need enough discipline to find the system to track your spending and income….but after that, it’s following your system and throwing off discouragement.

Debi
Debi
7 years ago

We started doing this about 4 years ago as pre-retirement planning. (We’re still 6 years from pulling the plug.) How would we know how much we need in retirement if we didn’t know how much we were spending and on what now? Genius! It’s been a real eye opener. I think a lot of people who don’t do this would be shocked to see what they really spend, and on what.

lmoot
lmoot
7 years ago

I can say, without a doubt, that putting money in savings and transferring from savings into checking was a complete failure for me. I absolutely have to keep them separate, with only one-way transfers allowed (from checking to saving). Anytime I gave myself permission to take ANYTHING out of savings (that wasn’t earmarked for a specific expenditure), it was like opening up a floodgate. I personally do better having a set savings goal and a list of qualifying items that I am allowed to take money out for. If it doesn’t meet that requirement, I take money from my “parking… Read more »

Andy
Andy
7 years ago
Reply to  lmoot

I am exactly the same way. For that reason I have also several bank accounts: I have one checking for daily expenses. I have one long term savings where nothing ever gets out, and this is my true emergency fund/long term goal fund. And I have a third savings account, where I park a medium size amount to help with the fluctuation. On top of that I have several dedicated savings accounts that are tough to get access to, where I have small automatic transfers to. Those I use to pay for my yearly big vacation, and save for bigger… Read more »

Lance @ Money Life and More
Lance @ Money Life and More
7 years ago

Automation is my best friend. I automated my mortgage payment, rental house mortgage payment, 401k contributions, ROTH IRA contributions, savings and even some bills like auto insurance. The system does great to ensure we acheieve our goals in our money plan.

John S @ Frugal Rules
John S @ Frugal Rules
7 years ago

Like Pauline said Joe, you’re everywhere Lol! I would tend to agree that it does come down to setting up a system that works for you and running with it. I have found that automation is really what helps me succeed with any given system as I am too stinkin’ scatter brained otherwise.

Sam @ frugaling.org
Sam @ frugaling.org
7 years ago

Joe,

Terrific guest post!

You’re absolutely right about using systems to your advantage. But, I’d argue that that needs to be emphasized more specifically, too. Systems should use some behavioral modification techniques to encourage better spending.

All the best,
Sam

Ramblin' Ma'am
Ramblin' Ma'am
7 years ago

Systems help, but discipline is still needed. I have an automated transfer from checking to savings each month. But there are still those months when I go, “Whoops, I spent too much this month. Better transfer some money back to checking!”

Derek @ MoneyAhoy.com
Derek @ MoneyAhoy.com
7 years ago

Great article, it really is all about the systems that you follow.

I setup a monthly ritual of putting everything in a spreadsheet and track how I’m going. I also direct deposit into savings and only move over what is needed to pay bills each month.

Mike@WeOnlyDoThisOnce
7 years ago

Absolutely true that others’ finances are probably not in as good shape as they may seem from the outside. Good impetus to reshape your own thinking.

Mrs PoP @ Planting Our Pennies
Mrs PoP @ Planting Our Pennies
7 years ago

I’m a big advocate of systems, especially if you’ve got more than one person involved in the financial decisions. Having a system and a routine makes it easy to stay on the same page and eliminates a LOT of headaches down the line.

Debt Blag
Debt Blag
7 years ago

Ha ha. Yeah, I’m bad at this, but I recognize that I am so I try to take myself out of the picture as much as possible by doing stuff you suggest here. Automate, build systems, and find ways to fight urges… that’s what my PF is all about

Ely
Ely
7 years ago

Automation is awesome. I have direct deposit into two accounts. One automatically pays my mortgage, student loan, and IRA contribution. The other is my everyday checking – but once again, a huge chunk of that money is automatically transferred to savings. One savings account is accessible for large purchases, travel, etc. One is for property tax and insurance. One is for emergencies only. I only spend what is left in checking, unless one of the above applies. I don’t have to worry about tracking or budgeting or any of that mind-numbing stuff. I just set the money to go where… Read more »

Emily @ evolvingPF
Emily @ evolvingPF
7 years ago

Great post, Joe! I never thought about it this way, but I agree that systems can alleviate much of the perceived need for discipline. However, I think there is still discipline needed to stick to the system, like not transferring money back to spend after you have saved it or stopped auto-transfers entirely. To use your example, I can see that there are logistical barriers to removing money from a 401(k). For me, there are big psychological barriers to removing money from my Roth IRA even though I know it’s logistically possible. Did you suggest to your clients that they… Read more »

Joe Saul-Sehy
Joe Saul-Sehy
7 years ago

Thanks, Emily! Those were systems, too. We set up savings accounts at a different bank than the checking account (too easy to touch). I also recommended that people NOT set up easy-to-reach cash reserves. Sure, it looks good to have a money market that’s attached to your checking account OR that just has drafts and online privileges….but all you’re doing is making it easy to ditch your system and wallow in immediate gratification. For Roth IRAs and investment accounts it was a matter of education. If you know what the long term goals are and that you won’t reach them… Read more »

kathleen
kathleen
7 years ago

You ARE a rocket scientist! Your systems have helped me tremendously.

Kingston
Kingston
7 years ago

My system is quite low-tech; it involves a small spiral-bound notebook and a monthly planner. But with all the dates of recurrent expenses (quarterly property taxes, quarterly water bills, semi-annual auto insurance, annual homeowner’s insurance, etc.) noted in the planner, I can see at a glance what the month ahead is going to bring. I keep track in the little notebook of what’s due and what’s been paid for rental property and personal affairs. I don’t know why it took me so ridiculously long to figure out my simple little system, but once I did I stopped being blindsided by… Read more »

Joe Saul-Sehy
Joe Saul-Sehy
7 years ago
Reply to  Kingston

I love it!!!!!

That’s why the best system is: the one you’ll use.

It doesn’t have to be high tech.

Thanks for sharing.

Jake @ Common Cents Wealth
Jake @ Common Cents Wealth
7 years ago

This is great advice. We use a lot of systems and automation to make our finances as hassle free as possible. It is definitely harder to save money when it’s not automated and you have to conciously do it ever week or month.

krantcents
krantcents
7 years ago

I have used a payroll deduction for savings for 40+ years. It did not take discipline as much as motivation. I was always a saver and just used what was available to support that goal. My investing choices are set up to just take of it automatically. It just make sit easier to have it deducted automatically.

Law Office of Leslie Williams
Law Office of Leslie Williams
7 years ago

Excellent tips to maintain a healthy financial lifestyle! I love your advice for having a weekly budget meeting.

Kyle @ Debt Free Diaries
Kyle @ Debt Free Diaries
7 years ago

I’ve found that counting my savings for the month as planned expenses helps a lot. Every paycheck that comes in gets a specified portion immediately transferred over to savings and filtered into the different buckets for various goals. If I count that money in our budget as an “expense” rather than savings, it helps us keep on budget with everything else too! Think of it as paying yourself.

reinkefj
reinkefj
7 years ago

Having worked on Wall Street, where I was infected with the arrogant attitude (i.e., I can do brain surgery on myself while driveing the car by reading Grey’s Anatomy), I won some some and lost some. My best result was by hiring a planner, who gets a flat annual percentage every year. Sadly, I still deep in my heart believe I could do better, but his results have been impressive. Like he says, “I make more by making you richer”. Suggest that everyone consider that the Wall Street casino needs a professional disciplined approach where the pro is not compensated… Read more »

Joe Saul-Sehy
Joe Saul-Sehy
7 years ago

I’d like to say a quick public thank you to Ellen and everyone at Get Rich Slowly for letting me guest post today! I enjoyed the discussion here in the comments. It’s always pretty lively at GRS!

eec
eec
7 years ago

I use a month-at-a-glance calendar to mark all bills and have a set amount auto-transferred out of my checking account into ING every payday. My issue: I always overspend and end up having to transfer money around to pay off the credit card. I could blame it on having a baby 7 months ago but truthfully, I have always done this. Now I just overspend on baby and not me. I digress.

Joem
Joem
7 years ago

Well it depends on your definition of discipline. Sticking with the “systems” you mentioned takes discipline… You can come up with the best systems but if you do not have the discipline to follow the system, it’s useless… Just my opinion…

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