One of the great things about our modern age is the huge library of information available to us at our fingertips. You may, if you’re like me, simply be unable to imagine how we got anything done before the internet. How did we buy birthday presents for kids? How did we look for new places to go on holiday? Yes, it’s a modern problem, but stepping back makes me realise how amazing it is from not that long ago.
The other positive (and sometimes negative) aspect of the modern age is not just the spread of information, but the spread of ideas. You can be introduced to all sorts of people, who have all sorts of ideas which you can engage with, research further, question as well as the more passive follow, like and share. And this is how I came across one of my modern-day heroes – Jocko Willink.
Jocko has been described as “one of the scariest men alive” by Tim Ferris. Jocko is a former US Navy Seal commander who had 20 years in the service, include time in places like Ramadi in Iraq in 2006 which sounds as close to Hell as anyone could possibly imagine. Since his military retirement, Jocko now runs a business consulting firm specialising in leadership and getting high performance teams to work together.
Jocko’s ideas are simple, sometimes brutal and very effective; however I’m not going to cover them all, just the main one in the title of this piece –
Discipline equals Freedom. It’s not overly difficult to see how discipline benefits your finances.
To help, my view of financial discipline is:
- Simply having a plan in place – that’s a big first step that you would be amazed how many people never get to.
- Move at least 10% of your income on payday to a limited access savings account – this really works wonders and is your emergency money (or investing money).
- Move 10% of your income to a splurge account – this is your fun money – you’ve worked hard for it, now go spend it on fun things. But remember, when its gone, it’s gone.
- Maximise your pension contributions whilst you’re working – tax relief is not going up and may come down sooner than we think. Use as much as possible whilst you still can.
- Take the long view – don’t be swung by uncertainty in markets and politics. With a long enough time horizon EVERY equity market goes up. But, remember there will be bumps.
- Write a will and get lasting powers of attorney with your spouse. Trust me, if the worst ever happens this will save you and your loved ones a HUGE amount of pain and grief.
- Make sure you have the right protection for death and illness. Sometimes your employer may provide this, other times they won’t. Ask yourself “What would happen to my family financially if I was unable to work?”
Let’s call these the Magic 7. No, they’re not meant to be easy. Yes, you will have to make sacrifices sometimes. Yes, I understand this is beginning to sound like a lecture, but what I’m trying to give you here is…. Freedom.
Freedom to retire and live how you want.
Freedom to ignore all the doomsayers telling you every day how the market is going to crash.
Freedom to spend time with loved ones on holidays or doing fun things because you’re finances allow it.
Freedom to have the reassurance that if something catastrophic happens, you and your loved ones are protected.
Discipline equals freedom. But freedom doesn’t just happen. It needs to be planned, discussed, tested, refined, adjusted and discussed again to form an amended plan. And again, and again. Every year. But is it worth it? I’ll let you decide.