We all dream of financial independence. The ability to create revenue while being independent from the grind of the nine-to-five sounds like an impossible dream, but thousands of people have been able to master the art and grow to be successful. What do you think is holding you back? Your job? Your spending habits? Your lack of knowledge?
In this guide, we’ll look at the five things that are probably holding you back from being financially independent. These things might seem simple or unobtrusive, but trust us, you’re going to want to get these five under control before you start your journey toward financial independence.
1. Lack of Knowledge
Perhaps the biggest detriment to your financial goals is your lack of knowledge. No one is born with an innate ability to master money; it’s something you learn along the way through education, research, and, of course, other people. When’s the last time you saw a toddler build a successful stock portfolio? I didn’t think so.
Knowledge is the ultimate tool in your journey toward financial independence. Surround yourself with books and articles on the subject matter, do your own research into markets and investment opportunities, and don’t be afraid to ask an expert for help. Financial planners and other financial experts can help you invest in the right places, manage your wealth, and even tell you what’s holding you back.
2. Poor Spending Habits
What’s your vice? What do you spend money on? Do you spend money before your bills are paid? Do you feel the impulsive need to spend money? Unfortunately, many people suffer from poor spending habits. Even if you quit cigarettes or replace them with CBD oil, or ditch all of your vices altogether, that doesn’t necessarily mean your poor spending habits will go away.
The key to curbing spending is to identify what you spend your money on and then separate your needs from your wants. Often, you’ll find that line is blurred. It can seem like you need something to make you happy, when in reality, you’re just partaking in retail therapy.
Spending can be a serious detriment to your financial security. While it’s impossible not to spend any money, being more conscious about what you spend your money on can reveal a lot about your financial habits.
3. Supporting Other People
Whether it’s children, friends, or family members, if you’re having to financially support another person or people, it’s going to slow down your financial progress. The average cost of raising a child to the age of 18 is about $14,000 per year or around $233,000 over the course of their lifespan. Remember that next time you think you might want to become a parent!
Supporting other people is certainly a noble endeavor, and in the case of a child, something that you must do, but consider your financial security before you support another person. Few people consider their financial situation before bringing children into the world and end up impoverished parents because of poor financial planning. For instance, if there was an event that put you in that financial situation, say a car accident, consider contacting a Columbia car accident lawyer to compensate you for your losses and help you get back on track.
If you’re going to support another person, be certain you can do so without impeding your financial goals. There’s certainly nothing wrong with helping someone, but you can’t exactly sacrifice your financial future on the altar of that relationship for the sake of their security.
Sale! Promotion! 20% off! BOGO! Every day, we’re bombarded with ads and promotions for the next best thing. The newest phone, the newest service plan, the biggest TV, the most expensive car. So much of our status and our social interactions revolved around one thing: consumerism. The need to buy, buy, buy, and keep buying until the day you die.
Consumerism is dangerous to financial freedom because it keeps you locked in place by tying you to the things you own. After long enough, the things you own will end up owning you. You’re likely financing many of these items, and with the average American holding somewhere around $90,000 in consumer debt, it’s no wonder so many people find themselves outside the reach of financial independence.
The bottom line? Don’t fall for the ads, the promotions, the coupons, etc. Focus on your goals and ignore the consumeristic mentality; no one ever became wealthy by spending all of their money on new clothes or electronics.
5. Your Job
Even if you have a great job, there’s a chance you’re simply not making enough money or don’t have access to a good benefits package. This can mean you’re struggling to pay bills and don’t exactly have a lot of wiggle room for saving and investing.
Take a good look at your debt to income ratio. Does your job bring enough money in to support you and offer enough to save or invest, should you rid yourself of personal debt? If so, then utilizing your financial resources, however limited, to pay off debts should be your first priority.