One of the reasons people struggle financially is because they make uninformed decisions, but more commonly, they make no decisions at all a situation also known as financial paralysis.
Financial paralysis is seen quite often in a lot practices. Just thinking about investing, tax or personal finance can cause stress and can be mind-numbingly complex. This, in turn, causes a great deal of people to avoid financial decisions because they lack financial confidence. The mistake most people make is that they think they need to know much more than they really need to know. You don’t have to be an expert on all things money. You just need to learn a few basic principles and you will be far ahead of the pack.
Use these principles in your everyday lives to become smarter with your money
- SPEND LESS THAN YOU MAKE. If you are constantly overspending and maxing out your lifestyle, you will never reach your full financial potential.
- FORGET ABOUT THE JONESES. Living up to society’s definition of “rich” can be costly. Know where you stand and don’t live larger than you are.
- PROTECT YOURSELF. Stuff happens, and when it does, your financial foundation can quickly crumble if the proper defenses aren’t in place. You should seek to protect every aspect of your life’s work – from material assets like your home to your most important asset, you.
- MONEY DOESN’T BUY HAPPINESS. Having money doesn’t mean anything. There’s plenty of research to prove you derive the highest degree of happiness when you spend your money on experiences, not things.
- SLOW AND STEADY WINS THE RACE. No one becomes financially successful overnight. It’s a long road of practicing good habits and staying disciplined. If you keep searching for the instant button, or speculating and gambling with your money, you’ll never reach your full financial potential.
- GET COMFORTABLE WITH BEING UNCOMFORTABLE. Investing is one of the most unnatural things you’ll do in your life. But you have to be okay with that – you have to be okay with the fact that markets rise and fall. Staying disciplined according to your Investment Policy Statement is the best way to find investing success.
- TIME IS YOUR MOST VALUABLE RESOURCE. Stop thinking that you have time to catch up. Not only does your money need time to grow, but it needs time to bounce back from drawdowns. The longer your money is invested, the better your chances of financial success. Investing early and investing smartly are crucial.
- OUT OF SIGHT, OUT OF MIND. One of the best ways to curb unnecessary spending and boost savings is to set up automatic deposits from every paycheck to go straight to your savings or investments.
- COSTS MATTER A LOT. Be sure you know how much your investments are costing you, practice management, and work with an advisor who is transparent.
- YOUR MOST IMPORTANT VALUES MUST ALIGN WITH YOUR FINANCIAL ACTIONS. If your financial actions aren’t furthering your most important values, you’re probably not going to accomplish the goals you set for yourself. Values should play the same role in your financial life as they play in your daily life – they should guide your financial actions and priorities.
