Five Good Reasons Why Financial Progress Is so Difficult

While I love to write and share all the benefits of financial independence and financial progress, I am the first to admit that the path is difficult . While the ideas behind personal finance are simple , it’s actually incredibly difficult to put them into practice. So how do we overcome difficulties?

This post was originally published on The Simple Dollar .

This is why more than three-quarters of Americans live paycheck to paycheck, and only a tiny fraction of Americans manage to accumulate enough wealth to be able to retire comfortably, let alone early retirement.

The concepts are simple. Did it actually happen? It is very difficult. But why is it difficult? Why do so many people dream and plan for financial success, but so many people fail along the way?

After spending nearly a decade fixing our disastrous financial situation, and then moving towards financial independence by constantly writing and studying personal finance, I found that there are five main reasons why people find it difficult to find financial success.

Let’s dig in.

Reason # 1: Spending money gives positive short-term feelings, but saving money doesn’t.

Let’s be honest: it’s nice to buy something new, something that you really want. There is a definite pleasure in buying a latte, buying a new gadget, a book, new clothes, a game, or whatever else you enjoy spending your money on.

The problem is that positive feelings rarely last long . You drink your latte and go on with your day. New clothes end up in the closet, mixing with the rest of your wardrobe. A new gadget will either become part of your everyday life, or it will be forgotten in your home. The good feeling leaves and you are left with more of the mundane.

Of course, we rarely think about it at the moment. We think about our desire and the short-term pleasure that we will receive … and then go for it at the expense of our long-term plans. A day later, the purchase is forgotten, but the money spent leaves a hole in our pocket. The money was gone, and we got absolutely nothing left to do.

Here are three strategies for getting out of this trap.

Spend your free time looking for free and inexpensive things that you personally like. In other words, instead of spending money on things that bring you a short burst of joy, have a better time . Ditch the things in your life that don’t make you happy, like the time spent on some of your disliked TV shows or the time spent aimlessly visiting the websites, and add things that really do make you happy.

Think often about the disadvantages of spending and the benefits of savings. I do this reflection when I am in the shower or when I am going somewhere. I think about some of my recent purchases and realize that the joy of the purchase did not last long, and then I believe that I would rather have that money in my checking account right now. I think that this money would actually be another step towards my big goals, and not something that is forgotten about a day or two later. This is a mental conversation that I have with myself quite often.

Change your social circle. If you find that your social circle on a regular basis is one of the reasons you spend money without a plan and with no future in mind, consider changing your social circle. Having a circle of friends is powerful, but not worth paying for . Encourage your friends to do things that do not incur additional costs, such as having dinner parties at home or dining out instead of going out. If you enjoy going out, concentrate on specific things that you enjoy and discard everything else. The idea here is that social interaction shouldn’t require you to empty your wallet . Good friends don’t cost a lot of money.

Reason # 2: It usually takes a long time to achieve financial goals

If you have a big overarching financial goal that you are working on, chances are you are looking for something that will not be met for a long time. This time is probably measured in years or even decades.

Indeed, a very long time ago.

Humans are also not the most patient of creatures. When you start looking at things on the scale of years or decades in your life, it’s pretty easy to start losing touch with that goal. It becomes a vague goal “someday” that has little effect on our daily life, and it makes it very easy to just walk away from that goal and give it up completely.

It may just seem like you will “never” get it, so why bother? Here are three ways to overcome this obstacle to financial success.

Focus on “micro-jobs” on a day, week, or month scale. Instead of focusing all the time on a huge overall goal, focus on the “micro-tasks” that can be achieved in a day, week, or month. As long as the end result contributes to your overall goal, they can be very beneficial.

Micro-goals can take many different forms, from trying to establish better lifestyles, moving towards certain milestones, or even tangible projects that will make you spend less or earn more in the future.

For example, you might set a goal not to spend money on a hobby you love for a month. On the other hand, you can set yourself a goal to bring your savings to $ 5,000 by the end of the month. Or, you can try something like sealing your home this weekend to cut down on future energy bills.

All of these projects contribute to the achievement of positive financial goals and give you something more tangible to focus your energies on. As the saying goes, the devil finds work for idle hands, so take care of yourself from idleness.

Look at the changes you’ve already made, not the distance to your goal. When you’re working towards a big goal, it’s tempting to keep an eye on the prize. After all, it’s all about where you want to go , right? You are moving in a positive direction. Why would you look back?

Well, the big advantage of looking back is to see how far you’ve come. Where were you a year ago? Six months ago? Even a month ago? How have your account balances improved? How much has your debt fallen in this relatively short period of time? What about what you set yourself up for from the start?

The point is, when you see that you are really doing it, that your financial condition has improved by leaps and bounds, and that you are truly moving towards a big goal, it becomes much easier to do it. to a big goal.

Focus on building a positive lifestyle that will make financial progress a foregone conclusion. This is very similar to the idea of ​​micro-goals, but it is just a small amendment to this idea. Instead of setting a strict goal for yourself, you simply repeat a very specific thing over and over, every day, until it becomes your new norm. If you do this with the many features of your life in mind, you will gradually transform your life into something that easily goes to your goal.

Let’s say, for example, that you eat a lot outside the home. You decide to ditch fast food and casual dining, leaving food out of the house for special occasions in great restaurants. You focus on this change day after day, which means that you prepare a lot of food at home, collect dinners to take with you, and so on. Over time, it becomes something new for you – the idea of ​​attending Taco Bell or Noodles and Company even from time to time starts to seem less attractive.

Our life is full of these kinds of routines that can be changed for our personal benefit. We can customize our spending schedule, travel time, diet, morning routine, sleep schedule, and so on. Tweaking these settings can offer some real benefits, especially if you keep working on tweaking until it becomes your new norm.

Reason # 3: Financial goals are often very passive after initial action

One thing that happens to almost every financial goal is a large influx of initial action to get things going, but once that’s all done, progress towards the goal tends to be almost entirely on autopilot.

It’s great in terms of consistency, but in terms of feeling connected to a goal and actually feeling like you’re working on something … it’s not that good. This long “passive” period can make you feel very disconnected from your goal and easily turn into frustration and abandonment of that goal. If you’re not in touch with it, it’s easy to start wondering why you’re saving that money at all, and it’s easy to just quit from there.

The trick is to find ways to stay connected to your big goal, even on the long journey through the peaceful valley of slow progress. Here are three tools for doing this.

Work on large, active projects that generate savings. One great way to stay focused while you are in this valley of slow and steady progress is to find useful projects to work on, ones that have results that can be beneficial to your overall goal. Since almost every financial project relies heavily on the concept of “spend less than you make,” finding ways to spend even less is a great way to accelerate the achievement of almost every financial goal.

What big active project makes you spend less? Things like preparing large amounts of food in advance and freezing them, sealing your home, doing home renovations, installing insulation, and repairing your car can all lead to cost savings in both the short and long term. …

Of course, these are all big projects, but that’s the point. If you jump into a big project that will spend less money, you will have more money to move towards your goal faster than before. This is a great thing.

Likewise, work on large, active projects that lead to increased income. On the flip side, “spending less than you earn” is the earning component. If you increase your earnings, you are also quickly approaching your big financial goal.

There are many, many ways to make more money, but they tend to take a lot of time and effort. In your free time, you can start a micro-business, for example, launch a Youtube channel. You can work towards getting a degree or getting more certifications. You can simply get busy at work and strengthen your position there by trying to get a promotion. It all works. All of this can put more money right in your pocket.

The challenge is to set aside the time it takes for all of this to happen. The reason everyone doesn’t overestimate their income is because not everyone is willing to spend their time and energy on it. For those who do this, there are many ways to make more money.

Interact with other people who are working on such large projects. Look around your community and see if there are any entrepreneurial, professional, or do-it-yourself groups in it. A great place to find such groups is meetup.com ; the other is your local library. Then jump into these groups.

You will find people motivated and willing to take on big projects with great potential to save or make money for themselves. If you are attracted to the idea of ​​widening the gap between what you spend and what you earn, and are willing to take big challenges to get there, you will find some value in these groups.

The real advantage, however, is the social environment. With such groups, you will find yourself hanging out and interacting with people who are focused on increasing their income or saving money. This attitude will reflect on you over time and motivate you to take on such large projects on your own.

Reason # 4: financial goals may seem out of reach

When you sit down and look directly into the eyes of a big financial goal, the amount alone can scare you.

When you look at a goal that requires you to have ten times your annual salary in the bank – or even more in the case of things like retirement savings – it may seem like you will never reach that goal. Is always. It seems completely out of reach, because you are looking at a number that is an order of magnitude larger than anything you have ever dealt with in your life.

Many people give up in response. Without even trying. And because of this, they miss out on many beautiful things in life.

Here are three helpful strategies to apply if you feel like the sheer size of your goal is impossible to achieve.

Break your gigantic goal into smaller chunks that seem possible but still seem daunting. The end result may seem overwhelming, but what about the first milestone towards this goal? Does it sound too big?

If you haven’t already, break down your big goal into smaller milestones, preferably in a way that makes the first milestone seem achievable in the next year or so. Each successive milestone should be followed by a similar gap. The idea here is to sketch out a series of milestones, ideally at intervals of a year or less, that you can achieve if you put in some effort and that gradually move towards this gigantic goal that is far on the horizon.

For example, if your goal is retirement savings and you need to save $ 1,000,000 over 30 years, you would have to save somewhere on average about $ 10,000 a year to do that. So focus on this milestone. You need to save $ 10,000 this year to meet your big retirement goal. So how can you add $ 10,000 to your retirement savings this year ? This is still a challenging goal, but it is not a seven-figure goal.

Think about what you are working for beyond simple finance and how you can use non-financial approaches to achieve your goal. It’s easy to fall into the trap of thinking of financial goals as something that comes down to nothing but dollars and cents, but the truth is, most of our spending follows our other lifestyle choices. When we decide to live in a certain place, we usually have many reasons, and only a few of them usually have anything to do with finance.

Instead of focusing on dollars and cents, sit down and start thinking about other aspects of your life. What is really important to you? Where do you spend your time, money and energy that is less important to you? Are you satisfied with the place where you live? Are you satisfied with your job?

Often times, changing your life so that you feel more content has really helped make big goals more possible. You will feel more energized to reach milestones and create projects that can improve your financial pace.

Change your goal to make it more realistic if it seems unbearable. In the end, it may turn out that the goal you have set is too great. Even when you break it down into stages and dig into your life to find new approaches, the goal is simply unattainable without some kind of miraculous intervention.

If so, don’t be afraid to dim the target a little. Consider putting off achieving your goal for a few years so you have more years to work. Consider ways to reduce the target you are shooting at. Consider staying in your current career – or work in general – a little longer.

The idea is not to give up on your big goal, but to adjust it so that it seems at least possible to achieve it. I usually find these adjustments work well with the idea of ​​milestones that I discussed earlier, as adjusting the goal until milestones seem possible is a great way to start a project.

Reason # 5: Life seems to always interfere

One big last reason why it is difficult to make financial progress is everyday life. Murphy’s Law. Whatever you call it.

As great as your plans are, sometimes life just gets in the way. You are losing your job. Someone gets sick. Your car needs to be replaced. Your water heater breaks down and floods your basement. And with that, your plans start to fall apart. The path you have been walking is suddenly changing, and the great goal seems even more distant than ever. It starts to seem impossible.

It should not be. You can take action now to protect your progress towards your big goal. Here are three things you can do.

Create an emergency fund. Money is king. Having a pool of money available for use exclusively in an emergency makes coping with a job loss or car problem much easier. You also don’t have to give up on goals or cut back on your progress towards goals.

It’s simple. Simply create an online savings account with the online bank of your choice (both Ally and Capital One 360 are solid choices), then set up automatic transfers to that savings account once a week. Just transfer a little – $ 10, $ 20, or $ 50, or whatever suits your budget. Then wait.

When an emergency happens, there is no need to panic. You don’t have to go into debt. Instead, just calmly transfer money from this emergency fund into your checking account and sort it out.

Some people like to use a credit card for this. This is a bad idea because it will not work in the event of identity theft and you will be dealing with credit card debt that will knock your target off track. Use cash.

Get rid of unnecessary risks in your life. What are the things in your life that are most likely to lead you astray? Is this your health? Maybe your car is on its last legs. You may have friends who convince you to make all kinds of mistakes. Be that as it may, minimize this risk in your life . Change your social circle. Be proactive about car problems. Exercise and eat better. Work to get a more stable job. Know what public transportation options you have.

The fewer obvious risks in your life, the better. You can greatly reduce the likelihood of being led astray.

Plan upcoming challenges. Many life problems can be seen in advance. You know that property taxes will be levied fairly regularly. You often know when your car needs to be replaced. You know in advance when the insurance bills will come. Plan these things!

Start saving money now for activities like this. If you want, you can even use the same plan as for the emergency savings — just transfer more each week than you need for all of these upcoming known expenses so the rest can be used for emergencies.

This way, these known expenses don’t stray you off the path to success you’re on.

Final thoughts

No matter what obstacles you think are standing in the way of achieving big goals in your life, there is always a way around those obstacles for those who really want something better in your life. Don’t let these obstacles to your financial progress stand in your way.

Climb above it. Reach your goals. Walk past these obstacles into your dream life.

Top Five Reasons It’s So Hard to Make Financial Progress, and Strategies to Overcome Each | Simple dollar

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