Unlocking Your Financial Potential
Having a solid understanding of money has never been more important than it is now.
Yet, many people face several obstacles that prevent them from executing their money goals.
Economic turbulence, technological advancements, inflation, and shifting societal norms have made it essential for people to take control of their money to build a better financial future.
I recently talked with over 50 of my Instagram followers, asking them what was stopping them from taking the first step toward their financial goals. The responses highlighted a number of common roadblocks…
Let's dive into these common obstacles that are preventing many people from achieving their money goals, and discuss how you can conquer them!
Lack of Knowledge or Awareness
One major obstacle that often stands in the way of financial success is a lack of knowledge about personal finance, investing, and saving strategies.
Since financial literacy is not a subject commonly taught in schools, it's up to you to take the initiative to educate yourself. Luckily, you're already taking the first steps toward greater financial awareness by reading this and should be proud of yourself for doing so.
It's important to recognize that building a budget and financial system tailored to your needs takes time and patience. What works for one person may not be the best solution for you.
The key to discovering the most effective approach for your personal financial situation is to immerse yourself in the world of personal finance and experiment with various methods until you find the ones that resonate with you and your financial goals.
Here are some of my favorite money-related books to help you build a solid financial mindset:
The Psychology of Money (Morgan House)
Rich Dad Poor Dad (Robert Kiyosaki)
The Little Book of Common Sense Investing (John C. Bogle)
One Up on Wall Street (Peter Lynch)
A Random Walk Down Wall Street (Burton Malkiel)
Uncertainty Surrounding Employment and Income
Having a stable income is the MOST important part of the wealth equation.
You can learn everything there is to know about investing and the stock market, but without a steady income, it won't benefit you much.
The fundamental truth is that you need money to invest.
To secure a stable income, focus on learning valuable skills that solve other people's problems. The bigger the problems you solve, the more money you will make.
Once you've established a stable income, the next step is to build a solid financial foundation. Uncertainty surrounding job stability and fluctuating income can destroy your ability to plan and commit to long-term financial goals.
To address this issue, focus on building an emergency savings fund covering at least 3-6 months of living expenses. Yes, it will take time to build. But this safety net will offer you more financial flexibility and less stress.
Here are some in-demand skills to enhance your earning potential:
Programming or coding
Data analysis
Digital marketing
Graphic design
Project management
Copywriting
Sales
Fear of Making Wrong Decisions
Fear is normal. It’s part of being human. But fear of making mistakes can often lead to decision paralysis, preventing you from taking necessary actions. To combat this, begin with small investments and progressively increase them as your confidence grows.
Keep in mind that making an imperfect decision and learning from it is better than not making any decision at all. Investing something is always better than investing nothing at all.
Stay away from speculation and hype. Start by investing in index funds, and later (if you wish) allocate 10% of your portfolio to stock picking to test out your stock-picking skills.
If you discover you have what it takes to pick individual stocks over multiple years successfully, gradually shift your portfolio more toward individual stocks and away from index funds.
However, it's worth noting that 90% of people will fail to outperform index funds over a 10-year period. Yes, Including the professionals who dedicate their lives to stock picking.
Need for Guidance and Mentorship
Navigating the world of personal finance can feel like a maze, especially for beginners. While the internet has made learning about Investing on your own easier than ever, sometimes you just need a helping hand. Weirdly enough, I love talking about this stuff and helping people create detailed, organized plans that will banish their feelings of confusion when it comes to money.
Quick plug: Over the past year, I've had the pleasure of working with 129 people from all around the world, and I can't wait to assist you on your financial journey as well! If you're ready to take the next step and want some personalized guidance, schedule a one-on-one call with me. This is my favorite part of what I do here. And I'd be thrilled to help you craft a financial plan tailored to your needs and goals. You can schedule a call with me here.
Paying Off Debts and Building an Emergency Fund
Before diving into investing, it's crucial to prioritize paying off high-interest debts and building an emergency fund. When you pay off debt, you're effectively liberating a portion of your income. You reduce the amount that compounds against you for every dollar paid towards your debt.
Consider this: If you owe $1,000 at a 7% interest rate, each dollar paid off on that debt is like earning an automatic 7% return since it's no longer working against you at that rate.
Having a paid-off car, a 3-6 month emergency fund, and no consumer debt can make your life significantly less stressful. You may not think you need an emergency fund until you're in a situation where it becomes a lifeline. So, be proactive and secure your financial foundation before venturing into the world of investing.
Psychological Factors
While motivation can be fleeting, discipline is what truly drives progress. To maintain discipline and stay consistent with your financial goals, you must establish compelling objectives that inspire you to work towards them daily. Whether it's achieving financial freedom, retiring your parents, or providing a better life for your family, setting financial goals is crucial. Develop a budget and establish a routine to track your expenses, which will help you remain disciplined and motivated in pursuing your financial objectives.
Remember, your mindset can either be an asset or a liability. Take a cue from Warren Buffett, who, even at nearly 100 years old, still maintains a longer investment horizon and mindset than most 20-year-olds. Adopting the right mindset is a vital component of achieving financial success.
Balancing Personal and Professional Aspirations
Finding the right balance between your passions, work, and personal finance goals is crucial for maintaining overall well-being. While enjoying life is important, planning for your future is equally importnat. Strive to strike a balance that allows you to live in the present while also securing your financial future. Align your financial goals with your values and aspirations, and be open to making adjustments as needed.
The "YOLO" (You Only Live Once) mentality might seem fun in the moment, but it's essential to remember that the consequences of such decisions can have long-lasting impacts on your financial stability.
Final thoughts: Unlocking Your Financial Potential
Getting a grip on your financial future is super important in our fast-paced world. We've chatted about some common roadblocks like lack of knowledge, income uncertainty, fear of making mistakes, needing guidance, handling debt, mindset stuff, and finding that sweet spot between life and work. The good news is, with the right moves, you can tackle all of these challenges head-on.
So, keep learning, reach out for guidance, stay disciplined, and find your unique balance in life. Remember, it's a marathon, not a sprint, and every little step you take gets you closer to crushing those financial goals. You’ve got this!
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Want to keep learning? Check out some of my other blog posts:
As Always: Buy things that pay you to own them.
-Josh
Blog Post: #090
