I’m not going to give you the top 10 things you need to do in order for you to stop living beyond your means, and master the art of self-discipline.
I’ve only got one!
Let me ask you a question. Which Would You Take?
$100 now or $200 in one year?
Rebecca Olsen, a Ph.D. researcher from the University of New Zealand, studied this very question. Surprisingly, she found that many people chose to take $100 now rather than wait and receive $200 in one year.
Olsen is studying how to help people be more self-controlled and to focus on the longer-term gain rather than the immediate reward. These attributes are directly related to living beyond your means.
Olsen found that people might know what’s better for them, i.e. to stay healthy, eat properly, exercise, and save money, but they struggle to follow through on those goals, and people choose to take the smaller rewards now rather than wait.
What she found is that “the act of imagining personal, future events has been shown to help people make more self-controlled decisions. This means vividly imagining an event that will happen when you have achieved the long-term goal you’re working towards.”
Living Beyond Your Means, But Why?
The fact that most people will choose $100 now rather than wait one year “tells us that we don’t always know how difficult it is to make the self-controlled choice until we’re faced with it.”
There are many choices that we make that involve self-control and deferred gratification—like the decision to not buy that new purse, or the extra restaurant meal, or the new car …
Have you thought about what you’d do in those situations? Make the hard decision, or do what feels good in the moment? $100 now, or $200 later?
I’m sure most of you chose the $200 later, but, as Olsen says, you don’t really know how you’ll react in a situation until you’re actually faced with it.
What’s That Trait Required To Stop Living Beyond Your Means Called? And what’s the same trait that’s required in order to choose the $200 later instead of the $100 now?
The Importance of Self Discipline in Life
So I’ve got another question for you.
On a scale of one to ten (with one being low and ten being high), how disciplined do you think you are?
This is a critical self-reflective question, so stop for a minute and provide an honest assessment of your level of self-discipline.
We’d all love to be a 10, but as with all character traits, discipline comes in varying doses in different people.
If you answered between one and five, it’s not necessarily a problem. In fact, it’s great news—because problems with discipline are completely fixable.
Even if you struggle with discipline, you can make certain behavioral changes to your day-to-day behaviors that will build discipline into your daily life.
Start doing that, and you’ll start seeing improvements in your schedule, cash flow, personal satisfaction and more.
Discipline is Necessary for Success in LIfe
I want you to stop once again and think of the most successful people you know.
What trait do they have that you don’t?
Discipline is probably way up there on the list.
Luckily, discipline isn’t an innate quality—it’s a skill that you can develop with practice.
Now, let’s use, as an example, a typical entrepreneur (I’m using an entrepreneur because that’s who I am and what I know).
By their very nature, entrepreneurs are hyper-competitive. The more competitive they are, the more they have a sense of needing to win. Not only in business, but also in their personal lives. In keeping up with the Joneses.
That hyper-competitive quality can help make business owners successful.
But it can also hold them back. The reason why is obvious.
The typical Type-A businessperson is trying to win the material object game. They want the car, the boat, the shiny new office space that shows what a big deal their company is. But in order to really win big, they need to delay today’s purchase, choose the $200 in one year.
There’s a tendency to live beyond their means.
In the business example, in life, in personal finances, in achieving early retirement, it’s the art of self-discipline, the art of understanding when to spend, and when to hold back, that will help you get much further ahead.
Maybe not further ahead today, but further ahead in the long run. There’s a tendency to seek immediate gratification, to live beyond your means, to win the material object game.
If you buy that Mercedes Benz car now, you might “win” the material object game, but you won’t win the long game.
How To Master the Art of Self-Discipline
I can’t stress how important the concept of financial discipline is, not only in building your business but also in building your wealth.
Every unnecessary purchase you can delay— every extra dollar you save—means you have more for investing in interest and compound earning today and in the future.
When it comes to growing your wealth, knowing which purchases are necessary can be tricky.
So let’s start with the easy part:
The money you spend on your personal lifestyle, like that new leather jacket, truck, boat or dream house. Let’s consider the math of saving $100, and choosing to either delay your purchase or to not purchase that new jacket at all.
On the personal side, if you can reinvest that $100 at 5% interest, with compounding, in 5 years that $100 is worth $128. That means the little things you buy for yourself—or don’t buy—add up.
Let’s say you run a business, or want to start a business in order to build wealth?
What if you save that $100 that you were going to spend on a jacket and instead, invest in your new business?
A business is profit-generating (we hope), but, here’s something interesting.
If your business produces a rate of return of 15% per year, then today’s dollar will be worth approximately $200 in 5 years, and $400 in 10 years.
According to The Millionaire Next Door, overspending on your home could be the most significant inhibitor to achieving financial independence and a huge contributor towards living beyond your means.
What about borrowing to expand your business? The answer is the same: borrow beyond your means, and you struggle day after day to afford the debt and payments.
Having too much debt, and living beyond your means either in your business or your personal life, leaves little room for error, so, once you learn to master the art of self-discipline, your spending will get under control.
Discipline Means Success
From a business perspective, living beyond your means, and spending excessively restricts your ability to think clearly about how to expand your business. And, should business slow down for a period of time, it leaves you with little breathing room because you need to constantly feed your interest and debt payments.
There’s a reason that in almost every business and financial book you read, one of the first things that are discussed is the art of proper budgeting and financial planning, delaying purchases, saving for tomorrow, and learning how to master the art of self-discipline.
There’s a consistent theme throughout, and the point is, you can’t spend your way to riches on the business side, just as you can’t on the personal side.
If you want to grow your wealth, you’ll need to master the art of saying “no” to the next purchase and reconsider if you need to buy that new car, boat, or even that big beautiful new house in order to keep up with your neighbors.
Let me repeat that.
The core of building your wealth is having the discipline to say NO. The discipline to NOT live beyond your means, and to learn to master the art of self-discipline.
Until you’ve mastered the art of saying NO and master the art of self-discipline, you’re going to struggle to get to the next step in creating your wealth.
Motivation vs Discipline
When I started this article I used an example of Rebecca Olsen asking whether you would take $100 now, or $200 in a year.
I discussed the importance of mastering the art of self-discipline. But, what’s going to keep you motivated?
Ask yourself these questions:
What do you need to be a millionaire?
How hard is it to become a millionaire?
Creating wealth, and retiring early, becoming a millionaire, doesn’t just happen. It requires discipline and an eye on the bigger prize.
What is your long term goal?
Do you have a personal vision?
I wrote an interesting article on defining your personal vision which you can find here: How to Develop Your Personal Vision and Define Your Life’s Success
Is it early retirement? Perhaps joining the FIRE (financial independence, retire early) group?
Whatever it takes to keep you motivated, and to understand motivation vs discipline, is going to get you once step closer to reaching your goal. To reaching your vision.
As they say, if you don’t have a dream, you’ll never have a dream come true.
That’s why you need to understand the long game. To have your eye firmly planted on a final destination. Of knowing where you want to go, and what you want to achieve. Once you know that, understanding how NOT to live beyond your means becomes that much easier … because you have a plan.
I am a semi-retired entrepreneur. I lived my life understanding that I had to compromise or sacrifice many things in order to achieve the longer-term goal.
I lived on tofu for many years because I couldn’t afford meat.
I worked 70 to 90 hours a week for many years, watched my friends climb the corporate ladder, and sacrificed, BUT, I managed to retire by the age of 49, sell my business for 8-figures in 2017, and now travel the world. You can read my story here: My Journey Post Business Sale as I Sail Into a New Harbour. The Next Stage, Entrepreneur Semi-Retirement, and Life Post Business Sale
Good luck with your financial journey, learning not to live beyond your means, and mastering the art of self-discipline.
It’s a long road, but, with your eye firmly on the long-term goal, it’s worth it.
If you want to know what entrepreneur semi-retirement life is like, you can read about that here.
AND, if you’re a younger entrepreneur wondering how you can build your business, step-by-step, to create wealth and become a millionaire by the time you’re 30, you can read this blog post.
If you want to download my first book, which was on the top charts on Amazon.com in both the Business (#1 overall) and non-fiction (#1 overall), you can download a free copy from my website here.
And last, if you liked this blog post, and want to read more tips on how to build your business and become a successful entrepreneur, you can subscribe to my blog here.