While people start out with good intentions and set their sights on meeting various financial goals, many never achieve them and instead fail miserably.
Prepare a budget that outlines every financial expense you have. Having a list will guide your actions and restrict those that are unfavorable. In case you make an inevitable decision that was not part of the budget, you will know about it and evaluate how to address it. The plan will also teach you accountability and point out areas where you are deviating. It will also indicate your progress or performance.
2. Setting unrealistic goals. Most people have unsuitable goals for their financial journey to success. Their goals are either vague, too broad or exaggerated with no timeline. Setting unrealistic goals will demoralize you, especially in this era, where young people prefer duplicating celebrity lifestyles and lavish spending.
Today young people below the age of 35 are living on a tight budget. They are called “Generation Squeeze.” They have low income and are under a prolonged economic crisis. They are in debt and struggling with school loans and family difficulties. Another aspect of unrealistic goals is setting standards that are too high, with inadequate time to achieve them.
Evaluate where you are and your intended position financially. Set short-term goals to achieve a long-term objective. Small steps are more practical to achieve, and they motivate you to continue pursuing the ultimate target. Realistic goals entail specificity, a particular timeline and accuracy. Ensure that setting goals is a personal initiative; do not allow anyone to dictate or create the goals for you.
3. Lacking financial literacy. Ignorance is a significant enemy of progress and, in this case, financial success. A large number of people lack financial literacy. They believe financial success is doing things that they have always planned to do; for example, living in the moment. Success has no specific approach; it is a combination of proven methods that you apply according to your personal situation.
Openness to experience is a personality characteristic associated with people who are interested in learning new things and engaging in creativity. Nevertheless, it does not mean people with other personality traits should not seek further information. Knowledge has never been irrelevant, and that applies to financial knowledge. Read books, watch the news and follow closely emerging and trending issues and practices in finances. Also, work with a financial advisor.
4. Impatience. Pursuing success one day does not lead to success the next. Most people begin pursuing their financial goals with high confidence and motivation and are hell-bent on achieving them. But after a while, they may encounter unforeseen challenges and other difficulties that lead to impatience.
Those who become impatient change their goals, which hinders their financial success. Behavioral economist Shlomo Benartzi discourages people from having financial market phone apps, because people who do often make quick and bad decisions when they receive continuous stock updates.
Financial success is a process that takes time. Make sure you make the journey with a financial planner. Create small milestones that you will achieve at a quicker pace. Every time you do so, it will encourage you to further pursue your ultimate goals. Cultivate a culture of patience.
5. Lacking financial discipline. Nothing can be accomplished without discipline. To that point, only 40 percent of Americans spend less than they earn. Overall, Americans lack financial discipline; they will spend more than their earnings. Derailing people from their plan becomes easy, especially when you give them an enticing idea. Others begin their journey with the most viable habits and strategies but abandon them along the way.
Discipline facilitates the consistency that financial success needs. Stick to your strategies and the practices you have chosen to use. Eventually, they will come to fruition, and you will be glad you maintained your discipline. Success is the result of daily effort and not just a one-time achievement. Discipline enables you to achieve success because your lifestyle will be dedicated to self-control.
6. Resisting change. Change is never easy, despite the fact that it is the essence of existence. People do not like getting out of their comfort zone or what they are used to doing. A study published by Forbes revealed that 45 percent of employees in an organization like to maintain the status quo.
Resisting change is also quite evident when one has to part with items or things that have sentimental value — for instance, selling an heirloom or changing practices that you’ve had or done for a long time. You’ll be comfortable holding on to the status quo, but it will hinder your success.
You cannot achieve new things by maintaining the same habits. Achieving your financial goals will require you to make certain sacrifices. Agree to pay this price because it will reward you with more than you sacrificed. See the bigger picture and stop being the obstacle to your success.
7. Procrastinating. Various studies have concluded that 20 percent of the American population (and 95 percent of college students) admit they are procrastinators. Addiction to phones and technology, as well as social media sites, is causing millennials to overlook financial planning. This problem is a primary obstacle to your financial success — putting off the day you start saving or make a financial plan.
Postponing something you need to do is detrimental to success. Time passes, and one day you realize you’ve made no progress. Every time you feel like postponing something, resolve to do it immediately. Eliminate procrastination by taking action and soon you will adopt a constructive habit. Overcoming procrastination will bring you a step closer to your financial goals.
“Identify your limitations and formulate strategies to address them and it will be easier to establish a plan, practice self-discipline, make sound decisions, have security and maintain assertiveness.”
8. Making poor financial decisions. The University of Warwick in England researched the cause-effect relationship between poverty and poor-decision making. There is undoubtedly a connection, but not for the reason you would expect. Low-income earners are overwhelmed with the overbearing expectations of daily life and hence are left with no energy to make other sound decisions. This is a contributing factor to poor financial choices.
Avoid being blinded by your present circumstances because they are a hindrance to your financial goals. Always direct your mental energy toward what will help resolve your financial difficulties.
9. Lacking creativity. Doing something the same way all the time may not yield different results. People insist on doing things in an ordinary fashion yet expect extraordinary results. Avoiding or fearing creativity can cause you to stagnate for as long as you resist change.
This attitude will waste your time and hinder your efforts. Creatively think about how you will differentiate yourself. Creativity could even shorten your timeline for accomplishing your financial goals.
Everyone wants to be successful, but only a few are ready to take meaningful action. These habits will help you discover what has been preventing you from achieving your financial goals. Identify your limitations and formulate strategies to address them and it will be easier to establish a plan, practice self-discipline, make sound decisions, have security and maintain assertiveness.
— By Marguerita Cheng, co-founder and CEO of Blue Ocean Global Wealth