It should be everyone’s goal to achieve financial freedom. To put it simply, it means that you’re able to make crucial life decisions without feeling like you’re sacrificing too much of your financial stability. However, 7 out of 10 Americans today worry that they’ll never achieve financial freedom and feel like they don’t know enough about their own finances to make sound decisions. If you feel anxious about your own finances and don't know where to start, we’ve listed below five things to keep in mind that might be holding you back from financial freedom.
Poor Lifestyle Habits
There's a strong connection between poor lifestyle habits and not being able to achieve financial freedom. Examples of poor lifestyle habits are: constantly borrowing money from family and friends, living beyond your means, failing to have self-control, and not paying your debts on time.
As early as now, you should recognize the importance of having healthy lifestyle habits to achieve financial success. James Clear, the author of self-help guide Atomic Habits, points out how small, marginal habits are much more effective than setting grand goals such as "get rich" or "achieve stability." As an example, you can start by getting used to sticking to a weekly budget, or taking note of all your daily expenses. In time, they should lead to excellent results and a total lifestyle and mindset shift.
Not Learning the Basics of Financial Literacy
Not all schools teach financial literacy, and being uninformed can directly impact your ability to make wise financial decisions. So, it’s best to learn what financial literacy is and understand why it’s necessary. Some basic concepts of financial literacy are: creating a budget that can help you reach your goals, understanding financial terms, and prioritizing saving above unnecessary expense. You can start by educating yourself with finance books and magazines, as well as enrolling yourself in online financial literacy workshops. Finance writer Lorie Konish recommends titles such as “The Richest Man in Babylon," “Happy Money: The Science of Happier Spending," and “The Bogleheads’ Guide to Investing."
Fear of Investing
Not a lot of people understand the importance of investing and end up afraid to put their hard-earned savings at risk. However, investing takes your savings one step further and allows it to grow exponentially. There are many types of investments, but it’s important to educate yourself first before jumping the gun. Moreover, Money Control emphasizes that investments still come with their fair share of risks. But as long as you're responsible and put in the effort to inform yourself, you'll eventually learn how to establish good investment strategies and diversify your portfolio towards financial freedom.
Poor Money Mindset
Having a poor money mindset can cause you to feel immense negativity when faced with financial challenges. In turn, it can also breed unhealthy emotions like intimidation, procrastination, and defeatism — all of which can impede your progress towards financial freedom.
Indeed, Dr. Erika Rasure, assistant professor for Maryville University's online business programs, explains that your mindset and attitude towards every aspect of your life is reflective of your financial success. “If you've got a negative mindset, your finances are likely to reflect that bad attitude,” Rasure elaborated in an article on Equities. To reverse this thinking, you have to be confident and find faith in yourself that you’ll make the right decisions in life. Empowering yourself with the proper financial knowledge and asking for advice are just some ways to help you gain a positive financial mindset.
Making a Wrong Career Move
Of course, being stuck at a dead-end job that doesn’t pay well will definitely make it harder for you to achieve financial freedom. That’s why it’s important to figure out how to advance your career or shift into another field that can provide more opportunities for growth. Take a skills-assessment test to figure out the best career path for you. This can put you on the right track and place you in a better financial position.
Article made only for the use of prudentmoney.com
By Rachel Towns