If you’re like most people, you’re probably your own worst enemy when it comes to achieving financial independence. Attaining this much-desired state is often a case of “getting out of your own way” by making better decisions, seeking wise counsel, and exercising patience.
Simply put, you have to stop sabotaging yourself. To stop all the self-sabotage, you must be aware of when you’re doing it. Fortunately, that’s the exact purpose of this post– to discuss the ways people commonly sabotage their financial independence.
Here is a list of the 9 ways you may be sabotaging your financial success.
What Exactly Is Financial Independence?
Financial independence means something different for everyone. It can mean everything from being able to move out of your parents’ house to amassing so much wealth that you never have to work another day in your life.
For our purposes, a person or family is financially independent, if they meet one of the following two requirements.
- You are presently able to live comfortably without having to earn further income.
- Your current financial situation is likely to lead to the above scenario, provided you continue to make sound decisions.
Self-Sabotage Through Poor Planning
Unless you are the heir(ess) to a massive (and well-managed) fortune, financial independence doesn’t happen by itself. It requires a detailed strategy to get and maintain financial freedom. Here are 5 ways that a lack of proper planning can sabotage your financial security.
- An inadequate financial plan. The lack of a comprehensive and up-to-date financial plan is one of the worst forms of financial self-sabotage. Without one, it is hard to know what you are trying to accomplish within a specific time frame and how you will actually go about reaching your goals.
- Focusing on the short-term, instead of the big picture. Your financial life is a marathon, not a sprint. All of your financial decisions should derive from a wide-angle view.
- Not having documented, discernible financial goals. Well-defined financial goals are the sine qua non of financial independence. Not only do these goals motivate you to make wise decisions, they also provide a reliable metric for assessing your financial moves. Without financial goals, any map you might have is useless and without a destination.
- Poor budgeting. This can mean your budget itself is inadequate or that you fail to follow through on it consistently. It is necessary to know where you spend your money and how to direct your hard-earned dollar bills according to your financial plan and financial goals.
- Not seeking professional guidance from a trusted source. Not accepting professional help when your finances become too complex is doing yourself a disservice. Consider a financial professional to help you manage your financial life when you feel you could use the extra help to ensure you’re doing everything you could and should to make the smartest financial moves possible.
Self-Sabotage Through Poor Spending Habits
The second category of financial self-sabotage techniques involves your long-term spending habits.
- Overspending. This includes living beyond your means, impulsive purchases, and exceeding your budget from lack of awareness.
- Failure to track spending consistently.For most people, it’s impossible to spend wisely unless you understand how much of your money is going where.
- Not saving or not saving enough. Absent a tremendous stroke of good fortune, you must save money to achieve financial independence. The right attitude is to treat your savings as you would any other bill. Allocating money to your savings each month must become a regular habit. Think ten to twenty percent of your gross income as how much you should be saving.
- Living on borrowed money. The interest you eventually pay on credit cards and loans can cripple your financial life. Not only will it prevent you from saving money, an excessive amount of debt will also delay your ability to reach other financial goals beyond retirement savings, like education planning, vacation planning, or other miscellaneous financial goals.
The good news is that there is no need to feel discouraged or overwhelmed by any of this. Almost all of us are our own worst enemies when it comes to our finances. You don’t have to fix everything at once. Start by eliminating just a few of these self-sabotage methods and you’ll get the tangible results you need for motivation going forward.