In this second session of the MeaningfulMoney podcast, I take a look at five fundamentals for financial success. These are the behaviours that I have noted in many of my clients over the years, almost all of whom are self-made, ordinary people. I am seeking to impose each of these in my own life. It might surprise you to learn that only one of them is an actual physical action; the other four are states of mind, or ways of thinking.

But don’t switch off! I’m telling you, these are fundamental. That’s why I wanted to deal with them in the very first proper session of the podcast. Get these right, and everything else will fall into place, I promise

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Everything you need to know

1. Laser Focus

This is a single-minded pursuit of your financial goals. Think of the blinkers on a racehorse. They’re there to eliminate distractions and to focus the horse’s view forward – You need the same outlook because life will throw distractions at you at every turn:

• It might be big things like a redundancy, or major illness

• Or just a bigger than expected electricity bill

• Or even, the opportunity to buy something you’ve always wanted at a price which sounds ‘too good to miss’

If you’re not laser-focussed, these things can pull you off-track. Every time you lose focus, it can be harder to get it back.

As you can see from the videos, I am a bit of a chunky fella. I've done Slimming World and WeightWatchers – both work. It's just that often I don’t work them very well for very long! I know that if I have a bad day of eating, I have to get right back on track, or every day becomes a bad day, and every week becomes a bad week.

Laser-focus will enable you to right yourself quickly if you lose track, and to keep going when things are tough

2. Rigorous Budgeting

Budgeting is an intentional thing, you need to decide where your money will go, rather than tracking where it went. One is proactive, the other reactive. Like any practice, it takes work to get better at it.

Budgeting tends to strike either fear into people’s hearts, or boredom! But it’s actually easy to do once you get in the habit, and the feeling of control you get when you’re on top of things is awesome!

I mentioned last week how when I was a student, I used to close my eyes when I went to the cash machine. This is a textbook lack of control! When it’s so easy to gain control – why doesn’t everyone do it?

All it takes is an hour a month to fully understand where you money needs to go this month – so important. Session 3 of the podcast is going to deal with budgeting in more detail, so stay tuned for that.

3. Partnership with your spouse

Obviously this is only relevant to some people listening, but if you're in a relationship, it's essential that you work on your finances together. You may have separate finances to some extent, but there will be some overlap, for example you may have a joint account for household bills.

But if you're serious about your joint future, you need to work towards it TOGETHER.

It may be that one partner may not want to be involved, but it's tough for one partner to take sole responsibility. A partnership is best, even if one partner is more hands-off in the practicalities.

It's essential that any discussion about money is constructive, and not destructive. So many arguments within couples are about money. Stay away from blame or accusation – recognise that both parties can improve at communication and practice.

A strong partnership with your spouse or partner will foster a sense of joint purpose which is really healthy.

When Joanne & I were first married, she was the one who organised the money, and I just didn't really want to know. After a few years I took over and I didn't really want to bother her with it, which seems ridiculous now.

The lack of communication led to hiccups such as cheques being written that I wasn't expecting. Jo knows more about the needs of the children for example, so she might write a cheque for a school trip and because we weren't talking about it, this would take me by surprise.

Now Jo and I talk at the beginning of the month about what is coming up in the month ahead so we're both on the same page. It's a team approach.

4. Clear Goals

You need to be running towards something, or else you're running on the spot and not getting anywhere.

One of my favourite books in John Bunyan's Pilgrim's Progress, which is an allegory of the Christian life. In the book the lead character, called Christian, is travelling towards the Celestial City, or heaven. On occasion he catches glimpses of his destination, but often he can’t see it. When it is hidden from him, he has a scripture scroll which he reads to remind him of where he is going

For your finances, having clear goals will keep you focused on the important things and help eliminate or reduce distractions.

If you have your mind set on ONE-day, you're less likely to be caught off-guard TO-day

Your goals will likely have different timescales: Maybe the accumulation of your emergency fund, or saving for a holiday. These might be less than a year or two in length. Or perhaps you're planning towards paying off your mortgage – might be 20 years out. Or maybe even retiring, which could be five or fifty years away.

Having clear goals is essential for success.

5. Positive Mindset

You could argue that this is the sum-total of the four preceding points. I'm talking about a can-do attitude. Don't be a victim. Man-up and take control.

You CAN grab your money by the scruff of the neck and bend it to your will, instead of passively watching it pass you by. If you speak and think positively, your mindset, and future success will follow.

There's a great post from Michael Hyatt on this: 3 Actions You Can Take Now to Shift Your Emotional State. Might not agree with the religious aspect of that post – I do – but there's some great advice in there.

Everything you need to DO

Now we've established the five fundamentals for financial success, what should you DO about them? Here are three tasks you can get on with right away, which will move you forward towards success:

1. Set some goals

Split these into two types: Longer term Dreams, and shorter term Goals.

Thinking longer-term, it's impossible to have any numerical certainty when thinking 20 years out, but you can flesh out a dream in detail.

Maybe consider your ideal week. Answer the question: If you had all the money you needed, how would you spend your week? Notice I didn't say, ‘if money was no object.' This is not a realistic prospect for many of us. The goal is to have all the money you'll ever need, not to have an endless supply of money – very few people win the lottery.

Shorter-term goals can be concrete: ‘I want to pay my credit card off in one year from now'

It is best to have numerical goals if possible:

• Not: I want to reduce my debt
• Instead: I want to reduce it from £10,000 to £5,000 in one year.

DO THIS: Try to come up with a one year goal and a three year goal. Any longer is hard to think about in concrete terms

2. Make a commitment to yourself and with your spouse

Maybe for the first time in your life(ves), you're going to take control of your finances. You need to commit to hanging in there for the long term – you are NOT going to be financial victims!

It might be a good idea to write down your commitment, and you could both sign it perhaps. Then you should put the agreement somewhere you can both see it and hold each other accountable.

DO THIS: Sit down to discuss your goals and dreams together, and give yourselves permission to dream big. But above all, decide that you're going to take control of your money from this moment on, and remind each other about what's important – gently – when distractions come along.

3. Write down all your outgoings for a month

DO THIS: Write down ALL your outgoings for one month. Yes, everything!

You could carry a notebook around with you and note everything down, or put it in your phone, as you'll probably always have that with you. At the end of the month, or each week, try to categorise your spending into some basic headings

Why bother with this? The little things make a huge difference.

Let's say on your way to work every morning you stop at Starbucks and buy a coffee for £3.50. If there are 21 working days in a month, that's £73 a month you're spending on coffee! If you invested £73 per month for 30 years at 5% return, you'd have £60,985. And if you adjusted that for inflation, in today's money you'd have £44,844. Your coffee is costing you £45 Grand!

This task of writing everything down is probably the hardest thing I'm ever likely to ask you to do! Yes, I have done it myself. Two or three times in fact. It's an eye-opener, I can tell you!

Don't be like a whining child, saying “I don't want to do this”. Think of it like a test – will you pass?!

Summary

So in this podcast and shownotes, I have given you the five fundamentals for financial success that I have identified in my clients over the years. They are:

• Laser-focus
• Rigorous budgeting
• Partnership with your spouse
• Clear goals
• Positive mindset

If you can foster these in your own life and relationship with your partner, you're well on the way to making it yourself one day. These things will get you through days when you want to throw in the towel, or when life knocks you sideways.

Do you think I have missed anything? Is there are practice or attitude that you can think of which should be added to the list. Let me know in the comments below – thanks for listening!