Being "good with money" requires very little book smarts or knowledge, but instead requires a discipline. What if I told you you only needed to do 4 things to change your financial life. Now that is simplifying your finances.
Here are 4 steps to change your relationship with money forever.
Step One: Stop Borrowing Money
The first step is simple, stop borrowing money. Make a promise to yourself to stop borrowing money. If you do this one thing, your money worries will be drastically reduced.
Step Two: Wait 30 Days Before Making a Big Purchase
The second step is to delay making big purchases. The goal here is to put an end to impulse purchases. By waiting 30 days before making a big purchase, you give yourself time to really make sure that you want to buy it.
This step is really important because it will stop your from making stupid purchases. We all do it. We get it in our heads that we want something and then we go to the store immediately and buy it. Then, several days or weeks later, we realize that we didn't really want it. By waiting thirty days, you will give yourself time to make sure you really want it.
Step Three: Build and Maintain an Emergency Fund
The third step to change your relationship with money forever is to build an emergency fund. By building an emergency fund, you can stop worrying about money forever.
If you save six months of expenses in an emergency fund, you will have enough in savings to survive a layoff or other emergency.
Why will an emergency fund change you life? It allows you to take charge of your life. You are prepared for life's little emergencies. You are in control.
Step Four: Start Saving A Portion of Your Paycheck
By saving a portion of your paycheck you stop the endless cycle of living paycheck to paycheck. If you spend everything that comes in, you are not getting anywhere financially.
There are many ways to save a portion of your paycheck. I recommend putting money into your employer 401k up to your company's match and then into another retirement account like a Roth IRA. The goal should be to max out the amount of money you can save in tax deferred retirement accounts, and then start saving money in other investments.
If you only do the following four steps, your financial life will truly be changed forever. While none of these things are easy, if you focus on each of these, you can accomplish them.
If you would like to learn more about how to achieve financial discipline, please subscribe to my RSS feed. Also, if you have done any of the above, please share your tips for how to achieve them.
Related posts:
subscribe to the 
follow The Debt Hawk on 
{ 4 comments… read them below or add one }
Good words. It’s amazing what a little delayed gratification and a commitment to saving will do! =) It really comes down to priorities and discipline in many cases. Good post.
I am absolutely for waiting 30 days before buying.
I take it a step further though in my “Controlling The Urge To Splurge” article, where I actually go buy the darn thing. Put it on my shelf to see, and then return it. It helps satiate the hunger!
BTW, great tab there on the Twitter Top 100 list. I’m a twitter dummy, but I’m learning. How do I get on that list?
FS
When you put off a purchase, it’s so gratifying when you can then eventually buy something with no guilt. Such is the story of me and my iPhone. Bought one the first day it came out, quickly realized I couldn’t afford it. Waited 2 years to eventually get it, but it was WELL worth it!
Waiting 30 days was pretty big for me- usually by the time 30 days is up, I don’t want the item anymore – or a newer better one has come out and I start the waiting process all over!
Building an emergency fund was also key for us because it allowed us to get out of the cycle of credit cards where we would have to spend on credit every time something would happen because we had no money saved.
Great article!
Peter´s last blog ..2010 Tax Credits For Energy Efficient Vehicles: Tax Incentives For Electric Cars, Hybrids And Conversions