Everyone dreams of financial independence. Who doesn’t want to break free of the 9-to-5 grind and stop constantly worrying about money? Unfortunately, it is not always a simple process. Many people make mistakes along the way, and it is important to learn from them.
Financial Independence: The 6 Things Everyone Does Wrong
1. Becoming Obsessed
The point of financial freedom is to improve your life, not add unnecessary stress to it. Some people pursuing their freedom become so obsessed with tracking every cent that they isolate themselves from others. Their goals become obsessions, making it difficult for others to relate to and spend time with them.
The problem with isolation is it’s a death spiral. The more you isolate yourself, the less you want to interact with others, and the more isolated you become. Instead of seeing the vicious circle, you may start equating happiness with reaching your end goal. If the goal has become an unhealthy obsession, however, no amount of financial freedom or success will ever make you feel better.
Here are some signs an obsession has crossed the line from healthy to unhealthy:
- Thoughts and plan for finances interfere with your capacity to love
- You skip out on regular work or even forget about it because you’re researching financial investments
- Anxiety over your next financial move is causing you to lose sleep
- You’re unwilling to listen to advice from those closest to you
2. Relying Too Heavily on Tech
Technology is amazing. The apps and software available to us today make achieving financial freedom much easier, whether it’s an app that helps you save better or software to manage your rental properties from one place. But when apps take the place of true understanding and common sense, you can get into trouble.
If you do not truly understand how to save and use your money wisely, no app can fix this problem. If you don’t do your due diligence in researching rental properties and locations, no application or software can protect you from potential issues. Never rely 100 percent on technology; instead, master the basics of finance, budgeting, saving, and investment and then use technology as a tool to enhance your existing abilities.
3. Never Enjoying a Splurge
Achieving financial freedom is about seeing your money in a whole new way. Instead of seeing it in terms of what you can buy with it, see it in terms of how it can work for you. That said, if you never allow yourself to splurge, you’ll falter in your attempts to save and move forward.
We can only handle austerity for so long, which is precisely why humans have always valued holidays. A hundred years ago, holidays were times to splurge on the food you couldn’t afford the rest of the year, make some new nice clothes for the occasion, and stop working for a few days to spend time with family. These days, we can eat every day as if it were a holiday, and with a few clicks online, we can have new clothes delivered right to our door. Building wealth requires you to rethink these habits, but don’t swing all the way to other extreme and deny yourself everything.
If you never allow yourself the things you enjoy, it may be difficult keeping up with the savings goals you’ve set for yourself. Consider this scenario: you plan to save $400 a month and must deny yourself everything but the bare essentials to reach that goal. After six months, you get frustrated and go back to old spending habits. At the end of the year, you have gained nothing. If instead, you had saved just $300 a month and set aside $100 to treat yourself to products and services, you would have found it easier to keep up with your goals and been $3,600 wealthier by the new year.
4. Forgetting to Review Progress
Technology makes it easy to set up accounts that will automatically save money. While the hands-off approach can be a good thing, it has its downsides if you forget to check in on your investments regularly. You’ll save more consistently if you set up automatic transfers, but set aside a time each month to review your finances no matter what technology you have working for you.
This can be draining, so do it at the time of day when you’re feeling most refreshed and energetic. When you see something off, deal with it instantly. It will be much easier to correct a problem if you catch it early rather than tracking back to it later.
5. Not Understanding the Goal
If you turn the wheel of a car ever so slightly to the right or left, you’ll eventually drive off the bridge. It doesn’t matter that you only turned it a little: the only safe way across is straight down the middle. While working to achieve your financial independence, make sure you’re not expecting the wrong thing.
Financial independence can give you the freedom to pursue your passions, but it cannot make you passionate about something you don’t care about now. It can allow you to escape the 9-to-5 job you hate, but it cannot make you happy to be at home. It can free you up to seek a greater purpose for your life, but it can’t give you that purpose.
Instead of thinking about financial freedom as a goal, think of it as a step toward a greater goal. The benefits of financial independence are reduced stress, the ability to travel or live wherever you wish, security that you can cover expenses in an emergency, and freedom to develop as a person and pursue the things that bring you joy. As you work towards financial freedom, keep your eye on the ultimate prize and be thinking about what you’ll do with the freedom financial security brings.
6. Keeping It All for Yourself
Charles Dickens’ Ebenezer Scrooge is a literary characterization of a real problem: the misery of miserliness. History has provided many examples of people who ruined their lives and brought themselves nothing but despair because their pursuit of financial independence was self-centered. Consider Ephraim Lópes Pereira d’Aguilar, 2nd Baron d’Aguilar, an 18th-century miser holed up alone on his “Starvation Farm.” After his death, authorities found the starving cattle he refused to feed and over $250,000 in useless money (well over $5 million today).
Your financial freedom is about investing in yourself as a person, but it’s also about providing for family, sharing with friends, and doing good in the world. Many of the greatest influencers and change-makers in history have been those with bank accounts to match the size of their hearts—and the best way to ensure your drive never becomes an obsession while keeping your eye on the prize is to always be thinking of how it will free you to love and live more freely.
Avoid the Mistakes and Achieve Your Freedom
People just like you are on the road to successful financial independence, and many have already achieved it. You can get there, too. Check out The Creating Wealth Show today for all the tips you need on what to do–and what to avoid–on your road to financial freedom.