Self-discipline and this App will make you a Millionaire

“A person can be highly educated, professionally successful and financially illiterate.” – Robert Kiosaki

Speaking of highly educated and professionally successful people who still struggle financially, Robert Kiosaki says what is missing from their education is not how to make money, but how to spend money – what to do after you make it.

He goes on to say “Money without financial intelligence is money gone soon, if you want to be rich, you need to be financially literate...financial intelligence is the mental process via which we solve our financial problems.”

The good news is, you don’t need a fat pay cheque to be rich, but financial intelligence and self-discipline so that you keep your hard earned cash and grow your wealth further.

In fact, 80% of American millionaires are first generation affluent. In other words, they didn’t inherit any wealth from their parents and most of them started with nothing in their bank accounts but through self-discipline and financially intelligence, they became millionaires.

Elbert Hubbard, one of the most prolific writers in American history, defined self-discipline in the beginning of the twentieth century as “the ability to do what you should do, when you should do it, whether you feel like it or not.” 

When it comes specifically to financial literacy and wealth, Thomas J. Stanley and William J. Danko, in their classic book called “The Millionaire Next Door, say “Wealth is more often the results of hard-work, perseverance, planning, and, most of all, self-discipline.” 

The Millionaire Next Door book is a project that took more than twenty years of research including face to face interviews with more 500 millionaires to complete. The authors state that in the course of their investigations, they discovered seven common denominators among those who successfully build wealth.

The first and most important denominator is that they live below their means. Living below your means is the advice that keep coming over and over throughout this book. It takes planning, budgeting and self-discipline to live below your means.

One of the millionaires interviewed in this book said “Most of our wives are planners and meticulous budgeters”. Another millionaire emphasized the fact that, they live below their means.

 Recently, I decided to download a free App that was recommended by a friend in order to plan, manage, invest and budget my finances efficiently right in my fingertips. Initially, I was concerned about safety and security of this app as it requires my banking login details.

The App is called 22Seven. After looking at the reviews and reading an article by City Press titled “It’s life changing but how safe is the 22seven App,” I was convinced.

Here is the link to the article https://city-press.news24.com/Personal-Finance/is-22seven-safe-20160422. The article also contains a link to download the app with a quick YouTube video demonstrating how the app works.

Before you use the App for planning, budgeting and to manage your finances better, make it a point you follow the rule of three for wealth accumulation. The rule says that no matter how much you earn, divide your salary into three percentages (10%, 70% and 20%).

Firstly, the 10% of your earnings must goes into your savings account as soon as you receive your salary. Many call this “Pay yourself first” strategy. George S. Clason capped it best when he said “A part of what you earn is yours to keep. Ideally, it should not be less than a tenth of what you earn, no matter how little you earn. It can be as much as you can afford, pay yourself first.”

Secondly, the 70% of your salary is for your living expenses (Accommodation, Groceries, Transportation, Insurances, Entertainments, etc). The goal is to make sure that this 70% sustain you until your next pay cheque. That is what it means to live below your means and it takes self-discipline to do so.

The last 20% is for emergencies and all other unforeseen circumstances. This is a great plan to keep you out of debts and to accumulate wealth which is yours to keep.

With this plan in mind, the 22seven App will help you view all your bank accounts, view all transactions (categorized and uncategorized), budgets, financial goals and nudges, even your net worth as shown in the App home page below.

For obvious reasons, I decided to hide my net worth and bank balance for all my accounts. I still need to visit Capitec bank to update my login details.

The transaction tab shows you every details of where your money goes, such as recurring if it’s debit orders and day-to-day activities including the dates. It categorizes the transaction to Groceries, Transport & Fuel, Eating outs & Takeouts, Internet & cellphone, etc and next to each transaction you will see the amount spent.

My personal favorite feature of the App is its ability to show how much you have spent in a month for the last three months (on Groceries for instance) and gives you an average of a three-month period so you can have an idea of how much money you can allocate or budget for groceries, Transport & Fuel and so on for the next month and onward. 

Now that you have an idea of how much on average you spend every month on each category, you can set your budget to R1300 or less for groceries (for instance) based on that average as seen above. Once you set your budget, enable the spending alert so that the App can notify you when you have spent 50%, 80% and 100% of your budget.

Setting Financial goals is also important for wealth accumulation and this App helps you do just that. If you have a financial goal in mind, planning and budgeting becomes more meaningful and compelling.

When asked if he had a set of clearly defined goals, a multimillionaire who was interviewed in the Millionaire Next Door book said “I have always been goal-oriented. I have clearly defined set of daily goals, weekly goals, monthly goals, annual goals, and lifetime goals. I even have goals to go to the bathroom. I always tell our young executives that they must have goals.”

Whatever goals you have for the future (Invest my money, get an education, go on holiday, etc), you can use the App to plan accordingly. As shown above, if you want to become a millionaire within the next five years, the App will instantly tell you how much you need to save per month (R13,709 p/m).

This goal will help look for other ways of getting extra money for your savings and will motivate you to working extra hard. One of the authors of the Millionaire Next Door says “There is great pride, joy and satisfaction to be derived from building one’s own fortune. Countless millionaires have told me that the journey to wealth is much more satisfying than the destination.”

Lastly, the Nudges in the App are there to help you see new things about your money and do more with it. For instances, it can tell you the number of uncategorized transactions and how much they are worth. It will then give you an option to find a place for them or categorize them as you see fit.

In conclusion, always exercise self-discipline and pay yourself first by saving at least 10% of your salary as soon as it reflects into your bank account. Use self-discipline to live below your means (70% of your earnings) with the help of the 22seven App to plan, budget and manage your finances efficiently.

With self-discipline, you can even get to your next pay cheque without even utilizing the last 20% of your earnings reserved for emergencies. When this happens, invest all the 20% or whatever is remaining so that you will achieve your financial goals before their deadlines.

Lastly and most importantly, in order to grow your wealth even further and faster, invest your savings diligently by buying assets. “Mind your own business. Keep your daytime job, but start buying real estate (or any other assets), not liabilities or personal effects that have no real value once you get them home.” – Robert Kiosaki.