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How to Save and Invest With Black-Belt Discipline

Jan. 22, 2016
Personal Finance
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By Brearin Land

Learn more about Brearin on NerdWallet’s Ask an Advisor

Mastering Brazilian jiujitsu is a lifelong journey. It can take 10 years or more to earn the rank of black belt. But along the way, you develop a level of discipline that separates you from those who couldn’t make the commitment and sets you up for success off the mat.

Applying this perspective to saving and investing your money can yield equally rewarding results for your financial well-being. Following are five tips for building wealth with black-belt-caliber discipline.

1. Set yourself up for success: Manage your debt.

Whether we like to eat junk food or party hard, we often come into martial arts with so much excess in our lives that training alone won’t help us reach our goals. We have to do a lot of work on the back end to ensure that we make it to the next level.

Mastering our finances is no different. Just as jiujitsu students come to me with varying levels of skill, clients come to my financial planning practice with varying degrees of wealth and knowledge and vastly different definitions of financial independence. And just as the up-and-coming student must refine his or her diet, investors may have to trim some fat in the form of debt.

You may need to cut your debt before getting started with an investment strategy. On the other hand, if you have sizable savings and your debt load isn’t weighing you down, it might make sense to tackle both issues at once.

2. The first step is showing up: Start saving now.

The funny thing about jiujitsu is that most people who try it fall in love with it, but many people never even get started.

Saving money can be the same way, but it should be a no-brainer. If you don’t save enough for retirement, chances are you’ll end up in trouble. But you wouldn’t be alone. Research from the Government Accountability Office shows that the median savings for baby boomers ages 55 to 64 is a little more than $100,000 and a little less than $150,000 for those between the ages of 65 and 74.

That simply won’t cut it. And no investment advice in the world is going to help if you don’t have any money to invest. So don’t get complacent — start tackling your saving goals today.

3. Don’t give up: Spend wisely.

Nearly everyone who starts jiujitsu training gives up at some point along the way. Training gets rough and students eventually give in, telling themselves, “Well, at least I made it to blue belt.”

The average investor is no different. Most start out strong, but later experience a financial hiccup and lose momentum. Just like the path to a black belt, staying committed to your financial goals can be a grind.

Many of my clients who are struggling to find enough money to retire didn’t make any big, dumb decisions. Their situations are the results of little decisions they made over time: Buying a house or car they couldn’t really afford, remodeling a home, or splurging on a boat. Before they knew it, there was nothing left to retire on.

Making it to your next financial milestone means not cashing in too early. Even if you’ve made a lot of progress with your savings goals, stick to them with black-belt-level discipline.

4. It’s all about discipline: Stick to your investing strategy.

I had to overhaul my lifestyle when I began to train seriously in jiujitsu. I was used to partying and being sedentary, and I couldn’t change those habits overnight. That kind of transformation is a long process.

The same can be true of investing. We’ve all heard the adage “buy low, sell high.” We know what we are supposed to do, yet time and again, we do the exact opposite. But being disciplined is crucial because sticking to the plan when times get tough is the key to investing successfully.

5. Stay agile: Review your investments.

It takes a tremendous amount of discipline to tackle your debt, get your savings off the ground, spend wisely, and make smart investment decisions.

But discipline in investing, as in jiujitsu, is not just about taking up a defensive position. It’s also about knowing when to push forward. That means regularly checking in with your progress and looking for potential opportunities.

Buy and hold is a smart strategy over the long run, but we also want to take into account things like how companies and individual sectors of the economy are performing on an ongoing basis. We want to be able to buy, hold and sell (or buy) as necessary.

In other words, we need to stress test our investments to make sure we are staying within our risk tolerance and finding the areas of our portfolio that are under or overvalued. And hey, if we spot a good opportunity along the way, we’ll take an easy return.

The bottom line

Seeking a black belt in jiujitsu and finding your version of financial independence are both long roads. To achieve either one, you’ll have to maintain your discipline for the long haul. And once you think you’ve reached your destination you are sure to find that the journey has just begun. So enjoy the ride.

Brearin Land is a financial planner in Irvine, California, and the CEO of Irvine Wealth Management.

This article also appears on Nasdaq

Image via iStock.