In life, most people aren’t financially savvy. Everyone has a different skill set and some people just aren’t naturally prone to being good with money. As a result, too many people in our country never achieve financial success. Why? They’ve never learned how to properly manage their finances and our culture is prone to spending money instead of saving and investing it.
What does financial success mean?
Financial success can mean different things to different people. For some, it might be a way for them to leave the 9 to 5 job and follow their dreams. But for most, financial success is the way you can:
- Achieve financial security – Having enough money to cover your expenses and emergencies without having to borrow or run up large credit card statements. It also includes being able to save for your child’s education and your retirement.
- Live comfortably – Being able to afford a lifestyle that makes you happy. Living comfortably isn’t being able to buy a mansion, but to afford doing the things you want to do when you want to do them. These things include traveling regularly, belonging to a country club or simply having a comfortable home that is welcoming.
- Have free time to do things you love – Having the ability to do what you want when you want can be the ultimate achievement for many.
- Find peace of mind – Getting to the place where money no longer causes stress and anxiety in your life is the ultimate goal of financial success.
So with this in mind, let’s take a deeper dive into the reasons why many people never achieve financial success.
Lack of financial education
Did you ever take a class in school about money management? I never did and chances are most people are like me. It’s because courses dedicated to managing personal finances are few and far between. Unless you were lucky enough to have a family member or friend teach you how to be financially responsible, you probably never learned this skill. Thus, many people don’t live within their means. Individuals live a lifestyle they really can’t afford and end up spending much of their life in debt.
Emergence of a spending culture in the U.S.
In America today, our culture is a spending culture. It wasn’t always this way. In fact, up until 40 or 50 years ago Americans were considered frugal. This was a direct result of generations of Americans learning how to save money from people who lived through the devastating effects of the Great Depression. As generations passed and the Depression was merely something we read about in the history books, the American mindset regarding money management began to shift.
Today, it’s normal for people in our country to spend money on the things they want whether they can afford them or not. We can purchase big ticket items on credit cards and then worry about paying for them later. It’s also the mentality of keeping up the Jones’s, meaning if your neighbor purchases a sports car, you need to stay on par with them and purchase one, too. Thus, too many people in our country spend beyond their means because they’re chasing a certain lifestyle. And this lifestyle has been put on display with the proliferation of social media. Through social media posts, everyone knows what everyone else is spending their money on. Unfortunately, this behavior exacerbates overspending.
Interestingly, this spending mindset isn’t the norm in some other countries. Take China for example. The Chinese are phenomenal savers. In fact, it’s problematic for the real estate industry in their country right now. Because it’s ingrained in them to save their money, many Chinese people aren’t buying on real estate. This situation illustrates how over saving isn’t the best way to manage your money either.
How to live within your means
The ideal scenario is living within your means. Because when you’re financially stable, you achieve a level of freedom you’ll never attain if you’re always in debt. For example, you won’t be stuck at a company you don’t like because you can’t afford to take time off to find a new job.
So, how do you live within your means? The answer is simple. Create a budget. Track your expenses. However, developing a budget is easier said than done. It’s a tedious process, but one that will lead to financial success because it puts your expenses in the forefront of your mind. The budget process helps you make better decisions with your money because you can see things like how much your daily coffee costs over time. Then, you can choose to shift your behavior and start making coffee at home.
In conclusion, we’ll leave you with this thought. Every time you spend money frivolously, there’s an opportunity cost. The money spent could have been invested. And that investment would have grown over time, which leads to even more money in the future. So, develop a financial success mindset and contact a financial advisor today. They’ll help you create a budget and be on your way to financial success.
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