The measurement of financial success is often a misconception wherein the more you have, the more successful you are. However, this concept truly comes down to your financial goals and how you live your life.
For example, consider the lifestyle often depicted as the “high life.” This prioritizes luxury, material possessions, and experiences. Finances normally involve a high income and significant spending. The goal is to constantly have the newest and best things while enjoying lavish experiences.
People who live this way may spend a large portion of their income on things like expensive cars, designer clothes, exclusive vacations, and fine dining. There is a constant pressure to maintain this appearance. Once the income stops, so does the lifestyle.
This can be stressful and bring a lot of negative associations like losing your cars, house, and social circles. Focusing on a lifestyle like this can be overwhelming and daunting unless you are truly up to the task of constantly acquiring and maintaining expensive possessions.
By contrast, living a more modest life allows you the chance to gain financial security provided you save properly. It frees up your time and resources to concentrate on things that truly matter such as passions, relationships, and appreciating the simple things.
You might miss out on some experiences and feel restricted at times with living this life, but you can easily adapt to find ways to make it enjoyable. It is about finding fulfillment that is not dependent on keeping up with the Joneses.
Planning for your future is much wiser than buying the newest vehicle to show off to your friends that will be obsolete the following year. Your goal needs to be to have more in your savings account than your checking.
Habits for Long-Term Financial Success
A good habit to keep is planning for your financial future. Most of us start seeing money and our desires for material possessions kick in. Flash forward a decade and look at how empty your savings account is.
At this point, you have no down payment for a house, your credit is bad from missing payments, and you feel you may lose your job. This is not where you want to end up, so avoid it at all costs. Get a rough idea of where you want to be three to five years from now and focus on that.
Becoming successful in the financial realm of life takes proper knowledge and a lot of determination. It is solely your responsibility to decide how your money is saved and invested, as opposed to spending on possessions.
Keeping motivated is extremely difficult when you do not know what to look for. Celebrating small milestones towards your financial goals will keep you motivated and reinforce positive financial behavior.
With that said, motivation will not always be there, and rarely does it make an appearance. Your job is to have consistent discipline daily to ensure you are meeting your financial goals.
Learn to prioritize long-term financial well-being over instant gratification. This could involve saying no to impulse purchases and yes to saving instead. Your goal is to save three or four months’ worth of expenses before you even entertain the idea of impulse buys.
Sometimes a sale for an item you have been wanting tempts you, but ask yourself if is worth having versus simply wanting.
Schedule regular check-ins with your finances to ensure your expenses are paid. Review your budget, adjust as needed, and track progress towards your goals. Starting is the hardest, once established it becomes an intuitive part of you.
Related Article: “Living With Debt: How to Become Financially Literate“
Build a Money Tree
Changing your mentality for spending is critical if you want to succeed. Instead of being concerned with having the newest whatever this year, wait a year and save the money you would have spent. This is a test to see if you are setting yourself up for failure.
Focus your energy on something that distracts you from buying certain items. If you cannot resist the urge to buy something the moment it comes out, will you be able to handle bigger financial goals down the line, like a dream vacation or a down payment on a house?
Start saving for a house now instead of five years from now, even if it is very little. Readjust your spending habits and stop purchasing stuff you do not need. You have to become self-disciplined for this to work.
Your new mentality is becoming obsessed with how much money is in your savings account. It may be empty now but once you start adding money to it, you will begin to see it grow.
Once this seed of a savings account begins to root you will develop a metaphoric money tree. This money tree will grow depending on how much you add to it.
Eventually, your money tree will need to be pruned so that it grows to fit your lifestyle. Too many expenses will cause it to grow super-slow and may never reach its true potential. Always focus on which branches are growing the most and prune any smaller ones (expenses) alongside them.
The idea is to see where it is best to invest your time and money thus cultivating a life that brings you true fulfillment, not just fleeting satisfaction from temporary purchases. Start making smart choices today for a secure and prosperous future.
Invest In Yourself
Building financial confidence will take time but will give you more appreciation especially when investing.
Investing in yourself is the most important investment you can make. If you need to go to college to better yourself, then that may be your investment. The real investment you are looking for is something to make you money, preferably consistently.
For example, it may take a while to sell a house before you get to see revenue versus having a rental property that pays you consistently every month. Consider your goals, patience, and risk tolerance.
Learning to invest comes second when you have your financial priorities in order. If you are afraid of taking any financial risk, investing is not for you. However, there is a crucial difference between calculated risk and reckless gambling.
By educating yourself and understanding the risk tolerance you are comfortable with, you can navigate the investment world with a clearer vision.
When establishing overall wealth you must be willing to invest in something that will make you money back. What to invest in and how can be learned by talking to people established in the game, reading their books, podcasts, etc.
All this information can be found simply by searching around the internet.
The issue is when it comes to investing can be as simple as taking a $300 course about flipping houses and applying what you learned, or it can involve long-term strategies in the stock market.
The term “it takes money to make money” is often true, creates risk, and deters those unwilling to take a risk away.
Are you looking for quicker returns with potentially higher risk or a steadier income? It will take time alongside plenty of research to find what you feel most comfortable investing in.
Key Points to Focus On
Financial success relies on knowledge, strategy, and a long-term perspective, not just a big initial investment. Even if you had a huge sum of money to invest, would that make you feel more comfortable knowing how to invest? Of course not!
This is why playing the game with smaller amounts will allow you to build confidence to play for bigger money.
A shift in mindset coupled with some smart decisions can help you reach your goals Try starting with these:
- Align Investments with Goals. Match your investments to your goals instead of just throwing money at the market. Saving for retirement? Consider long-term growth options like stocks. Need a down payment on a house sooner? Explore options with lower risk and shorter time horizons.
- Knowledge is Power. Investing can seem complicated, but avoid being discouraged. Educate yourself on different asset classes like stocks, bonds, and mutual funds. Understand their risk-reward profiles and how diversification can help manage risk.
- Start Small, Grow Gradually. You do not need a fortune to begin. Many platforms offer fractional shares, allowing you to invest smaller amounts. Start small, gain experience, and gradually increase your involvement as your confidence grows.
- Focus on Long-Term Growth. Investing is a marathon, not a sprint. Do not get caught up in short-term market fluctuations. Focus on long-term strategies and avoid impulsive decisions based on market noise.
- Consider Professional Guidance. For complex financial situations or larger portfolios, consulting a registered financial advisor can be valuable. They can offer personalized advice tailored to your specific needs and are also worth the investment.
By following these key principles, you will transform from a bystander to an active participant in shaping your financial future. Remember, knowledge is your jet fuel – educate yourself, start small, and focus on steady growth. Talk to an advisor for more complex investments.
Building Wealth from Scratch
Financial success is not just about the money you have; it is about your ability to manage it effectively and grow it over time. You can still build a secure financial future even without having money already set aside.
Physically write your financial priorities so that you can see them on paper. Doing this will allow you to compare where your priorities are and what you are doing to obtain them.
Following these steps will allow you to build financial confidence and make informed investment decisions that align with your goals.
Creating a budget and tracking your spending will give you a better understanding of where your money goes. This allows you to identify areas to cut back and free up resources for investment. There are many budgeting apps and online tools available to help you get started.
Here are some ideas to get your brain thinking:
- Develop Valuable Skills. Invest in yourself by acquiring in-demand skills. This could involve free online courses, certifications, or apprenticeships. Focus on areas with good job prospects or freelance opportunities.
- The Gig Economy Advantage. Explore the gig economy for flexible income generation. Platforms like Upwork, Fiverr, or Taskrabbit allow you to offer freelance services like writing, editing, graphic design, handyman work, etc.
- Turn Your Hobbies into Hustles. Do you have a passion for baking, crafting, photography, or writing? Explore turning your hobbies into income streams. Sell your creations online, offer services like tutoring or photography sessions, or even start a blog and build an audience.
- Embrace Minimalism. Living minimally reduces expenses and frees up more money to save or invest. Declutter your belongings, adopt a needs-based approach to spending, and explore ways to save on housing or transportation.
- The Power of Negotiation. Never be afraid to negotiate your salary or freelance rates. Research industry benchmarks for your skills and practice negotiating with confidence. Getting paid for what you consider your value to be is the goal.
Remember, financial success is a journey, not a destination. By focusing on developing valuable skills, finding creative income streams, and managing your money wisely, you can build wealth over time and achieve your financial goals.
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- Featured image courtesy of Vecteezy