4 Keys to Achieving Financial Peace

Can you imagine having enough assets so that your entire income is covered by the interest, dividends, or rent generated by your investments? Could you imagine living a debt-free life and being able to take a European vacation whenever your heart desired?

What about being able to give thousands of dollars to charity each month or being able to truly help a person in need whenever they happened to cross your path?

Finding Financial Peace

For a long time in my life, I was so broke and desperate that I couldn’t begin to dream of scenarios such as the ones I listed above. I was so far in debt, and so lost, that thinking of having a paid-for house never crossed my mind. I was so scared of getting sued that taking a European vacation (other than to run away and hide) was never a possibility; heck, I couldn’t even save $1,000 for an emergency fund, let alone save up $8,000 for a major trip.

After months of sacrificing and getting my financial situation in order, I got to the point where I felt free. Free to find a job that I loved and looked forward to, not one that I was trapped at simply because they paid me a large salary. Free from the collectors, and free from the pressure of figuring out how to pay all of my bills, while eating and putting gas in the car.

While many believe that financial peace is only attainable once you have large sums of wealth, I discovered that financial peace comes when you have a plan and understand how you’re going to reach your goals.

4 Keys to Achieving Financial Peace

When I first started coaching individuals and families nearly three years ago, I started the first meeting with them by describing what it takes to get their lives in order and achieve financial peace. It went something like this:

1. Be Content

I don’t care who you are or how much money you have, it’s impossible to have financial peace if you never have “enough.”

If you’re always wanting the “bigger, better, nicer, newer” (fill in the blank), then you’ll never be happy. People consistently speculate that larger incomes coincide with higher levels of happiness, but the truth is that money won’t make you happy.

Being content with what you have, and realizing how fortunate you are compared to other people in this world, is a very important step to achieving financial peace. Reality is that you may never have everything you want, in that case, financial peace will merely be a carrot that dangles in front of you as you continually run on the treadmill of life.

2. Set Goals

If you never have direction or a purpose in what you do, then life will quickly drift away and you’ll wake up when you’re 65 wondering how you’re going to retire. Achieving financial peace – regardless if your definition of it means having lots of wealth, or simply having the peace knowing that all of your bills will be covered each month – will be unattainable if you’re unable to establish a definition of what financial peace looks like to you and a subsequent road map on how to get there.

When I first started on my journey out of debt nearly 6 years ago, my first goal was simply to learn to live on less than I made. Once I accomplished that then it was building my $1,000 emergency fund and then paying off my credit card and personal loan debt.

Now that that’s been achieved, we’ve moved on to saving a down payment for a house, eliminating our student loan debt, and increasing our retirement contributions.

Know where you want to go and why. Having solid goals and a “WHY!” allows you to maintain focus and fight through the tough times.

3. Be Intentional

While setting goals is important, they mean nothing unless you take tangible steps to accomplish them.

Nobody is going to help save for your retirement. Nobody is going to help you budget or make sure your bills get paid on-time. And there is nobody that’s going to make sure you stick to your budget so you can pay that extra $200 on debt this month.

With that in mind, a key step to achieving financial peace is to always be intentional with your finances. Every dollar should be accounted for each month: they should all be spoken for (in your budget), before the month begins.

4. Live on Less, Save the Rest

For some of you this may seem impossible to do. Your budget may be so tight that you’re juggling paychecks, running late on some payments, and trying to figure out how you’re going to buy Christmas gifts this year. For you, it starts with getting on a budget and implementing one of the 4 ways to increase your disposable income.

Living on less than you make means that you never go into debt, again. It means that you’re constantly taking steps forward and never moving backwards. You’re continually saving money in your emergency fund, non-monthly expense account, retirement accounts, and investing for your future.

Reality tells us that building wealth will be determined by your disposable income (i.e. how much you’re able to save each month), but achieving financial peace simply involves learning to live on less than you make each month, while saving the remainder and making tangible progress.

You don’t have to be rich to find financial peace; all most of us need is the comfort to know that our bills are covered each month and there is money left to do with what we wish. Beyond that, if you’re struggling with finding financial peace, then contentment is likely what stands in your way.

About the Author

By , on Nov 26, 2012
Andy Tenton
Andy is a 30-something New Yorker who turned his financial life around. He took charge of his finances, got out of debt, and is now working his way toward financial success. He is the publisher of WorkSaveLive.com.

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  1. Tony says:

    Could not agree more with the post, thanks for this! Your point that spending less than you earn = freedom to even think clearly is a very sound point. We all need to be in that space!

  2. “You don’t have to be rich to find financial peace.” I think this is something I always knew, but never really thought of it this way. I love your opening point about contentment. People always associate financial peace with financial independence. This article does a great job of pointing out the difference (although not really your intention). Thanks for showing me that I’ve always had financial peace, regardless of my income or debt levels.

  3. Very well said, Andy. I love the first point. Be content with what you have. Everything else flows from there.

  4. Squirrelers says:

    Good perspectives! I like the idea of living on less and saving the rest. It requires patience and not keeping up with the Joneses, so to speak, but this is simply a basic foundation to getting to financial comfort and even peace.

    The other thing that caught my attention was the notion of being content. I like to think of this in terms of being thankful for what I do have. Now, ambition and reaching for more is a good thing, but balancing it with appreciation for our current good fortune is important. It keeps us from excessively dwelling on what we don’t have, while having peace with what we are happy to have.

    • Andy says:

      Very well said! It’s extremely important for people to have ambition and motivation, but when that gets in the way of the more important things in your life, then you’re destined for failure.

  5. “Live on less and save the rest” should be the motto for all graduating high school seniors but unfortunately it isn’t. I love this concept as it is so simple but is rarely practiced. Great post keep up the good work.

  6. This is probably the best article I’ve read this week. I appreciate how you started with contentment. I believe this is key to achieving financial peace, saving, living on a budget, and having a retirement. It all starts here. If you are un-content, you will look for ways to make you happy and these ways usually involve money.

  7. For me it is all summed up by Mill (I know I use the quote all the time, but it’s worth it)

    “I have learned to seek my happiness by limiting my desires, rather than in attempting to satisfy them.” – John Stuart Mill

  8. Being happy with who I am, and how my life is, has been absolutely key for me..

    So much so that this year.. With all of the Black Friday sales going on, I couldn’t even really find anything that I wanted to buy.. Or maybe., just maybe, I am so excited about getting out of debt, that I didn’t want to cause a setback.

  9. A brutally honest post that speaks the truth – love it! What good is making a lot of money if you can’t be satisfied with what you have. I’m happier now than I was a few years ago with a crazy income swing day to day. Living on less is not all that bad if you realize the things that really make you happy.

  10. Pauline says:

    Even more than content we should be super grateful. I won’t go all Mother Teresa but we all have a roof, some food and an internet connection through some probably awesome tech device, there isn’t much to complain about. Great post Andy.

  11. Andy Hough says:

    I’m pretty good at being content and I’m starting to save money again. I need to do better at setting goals and actually making them, but overall I’m happy with my finances.

  12. Very well written. I think it’ll resonate with people in this situation even more because you’ve been there and done it. What are you plans for all of your extra money once you finally escape debt?

  13. I think I’m doing most of those things but I do need to earn more and obviously pay less in rent. But of course I have a plan for that! I agree with your steps. I do think it’s possible!

  14. You nailed it ” I don’t care who you are or how much money you have, it’s impossible to have financial peace if you never have “enough.” There are people that don’t know when enough is enough and work in crap jobs just because the money is good or brag about this and that. You know what I’d give up the high pay any day to have a job I love. I do have a job I love and I’m fortunate but money is now how we build our happiness it’s part of the plan but not all of it. Setting goals, and living below our means is just what we do but we also live life and enjoy it. I’d rather go down a poor guy then a guy who was never happy and was buried in his money. Great reminder Andy. Cheers and great post.

    • Andy says:

      I love the thought about the rich guy vs. poor guy. While money can certainly afford you some luxuries in life, if that’s what you define yourself by, or what you need to draw real happiness, then you’re bound to be a very empty person inside.

  15. I like “Be Content”. That is a good saying to live by b/c it’s hard to avoid lifestyle inflation. It’s kind of a played out saying but it’s really not about how much you make, it’s about how much you save.

    I try to take all my raises and stash them away so that my paycheck never gets any bigger. All my retirement accounts are now maxed out from using this strategy so now I need to think of something else.

    • Andy says:

      Wow Harry…that’s awesome you’re able to max out your retirement savings! If I were you then I’d be buying some rental properties! 🙂

  16. Contentment is key. I definitely get stars in my eyes when looking at new cars, bigger houses, nicer lawns, better teeth, but contentment has kept me in check. I am blessed to be where I am now, and I need to keep reminding myself of this, otherwise I’ll start wanting more.

    And always staying on a budget is going to help keep us grounded as well, because once I lose sight of where our money is going, it all leaves…

    • Andy says:

      Great stuff, Jake! I mentioned this in a few comments earlier, but contentment is a continual struggle considering the world that we live in. It’s absolutely necessary to reflect as often as possible and realize that we all have more than we could ever need.

  17. I think these are all awesome tips. I’m with you- 5 years ago I never could have imagined where I would be financially today. It only takes making some small but permanent changes to make a huge difference. Good post!

  18. Very insightful post Andy, thanks for writing. I will share widely…

  19. CF says:

    I like your ideas. We’ve tried to do many of these things ourselves. Keeping a budget is key. Right now, our main focus is increasing our rate of savings and investments, and slowly paring down on our possessions.

    • Andy says:

      The budget is important and we personally have to get back to it. We’ve had a few wrenches thrown into our plans recently and it’s taken some juggling.

  20. I think once you decide what you want, life goes up from there. People run up debt to have things they believe they need for happiness. Happiness doesn’t come from a store in any way, shape, or form. I love that you have this plan in place now. I wish I’d done it years ago.

    • Andy says:

      The important thing is that you’ve gained financial focus at exactly the right time (as you’re selling your practice)!

  21. Mackenzie says:

    I love #4: Live on less. Save the rest.

    If you don’t have a savings, you’ll be in a constant influx of worry over your bills. There will never be “enough” and the strain of living like that is difficult.

    • Andy says:

      As long as you’re continually saving (something…regardless of how large or small) then you’re making progress. It’s hard for those that can only stash $25/month though but it’s important for them to realize that it’s better than nothing!

  22. Peter says:

    As others mention, I think the piece about contentment is key. Unless you can find contentment in your life, you’re always going to be chasing the next big thing, trying to make you happy – and content.

    • Andy says:

      I do agree Pete and it’s the primary thing that helped us to turn our financial situation around. The problem with this is that it’s a continual battle…as your life evolves and as family dynamics change, it’s something you have to reevaluate and understand that you probably have everything you truly NEED.

  23. Catherine says:

    I agree with John, especially in today’s world of ”more is always better” mindset it takes a lot for a person to accept what they have is enough and don’t always need the newest and best thing(s). I’m currently trying to preach this exact thing to my sister who has a hard time differentiating between wants and needs.

    • Andy says:

      The problem with wants versus needs is that it’s become a societal issue. Here in the US we “need” a cell phone and internet within our homes, however in many other countries those are luxuries that those people couldn’t fathom.

  24. Great insight Andy! I could not agree more on all of your tips, especially #1. Finding contentment in what you have is key to not getting caught up in the trap of feeling the “need” to buy more junk, which really does not bring happiness.

    • Andy says:

      I noticed that I struggled with contentment at times throughout the year; I think lifestyle inflation has a lot to do with it, but it’s good to recognize the issue and focus on being thankful for everything you do have.

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