I've written several times about how discipline is the key characteristic to building wealth. Some examples:
- Discipline is Vital for Financial Success
- Discipline Leads to Wealth
- Discipline: The Missing Ingredient in Many Financial Plans
Recently the blog of Dr. Thomas Stanley (author of The Millionaire Next Door) succinctly wrote about why this is the case:
Success in life and in work has been consistently tied to conscientiousness: being disciplined, having plans and focusing on details. Research in psychology consistently shows a relationship between this personality characteristic and how well someone will do on the job. Likewise, the research conducted on those with high net worth over a period of 30 years also provides insight into why they are balance sheet affluent – they have a long-term, disciplined approach to saving, spending and investing. These individuals are not distracted by what others are doing (e.g., the Joneses).
Here's a short list of all the things it takes discipline to do:
- Spend less than you earn.
- Work to grow your career.
- Earn money over and above your job.
- Save, save, and save some more.
- Make investments that grow over the long term.
- Avoid bad money mistakes that can kill your finances.
In other words, it takes discipline to accomplish all the key steps that lead to growing your net worth. I think this is why so many Americans are in rough financial shape -- because they have little or no discipline when it comes to handling their money.
A lack of discipline is not the reason all people are in tough spots for sure (for instance, many disciplined people have been hit hard by the economy), but on average we live in a pretty discipline-less society. We want it all, and we want it now. Forget discipline -- give me what my neighbors, co-workers, relatives have -- or better/more than what they have.
But discipline is certainly the key to wealth. If there's a young person reading this today, know that if you apply discipline to how you handle your money, odds are that you will become wealthy over time. Good news: the steps (above) to take are simple. Bad news: they aren't easy.
And while discipline isn't easy, I can testify that it is certainly worth the time, effort, and sacrifice. I'm sure many others reading this post will agree as I know several of you have taken the steps above (in one form or fashion) and seen the rewards of your efforts.