Tuesday, February 2, 2010

5 Obstacles To Financial Success

When it comes to obstacles to financial success, many people focus on debt. But debt is just one roadblock on the path to financial success. Other roadblocks are not as tangible. But as with any good plan, it is important to identify all obstacles that could hinder your success, especially if they are subtle. Once you identify which hurdles are setting you back, overcoming them would become a lot simpler:

1) Lack of knowledge/education - You don't need to register for Personal Finance 101 to get familiar with concepts related to money. If you can't pick up a book at the library, the internet is a vast resource you can use. Knowledge = power when it comes to realizing your financial dreams. Setting up this site and interacting with seasoned PF bloggers is one way I'm making sure I learn about personal finance.

2) Lack of motivation - Living paycheck to paycheck or drowning in debt should inspire you to take control of your finances. But sadly it has the opposite effect on some people and they continue on their downward spiral. If getting out of your rut is a problem, picturing why or for whom you're trying to regain financial control will help motivate you. It is also important to come up with a plan on how you will be proceeding step by step towards achieving your financial goals.

3) Lack of time - This is really an excuse. Unless you were born with a silver spoon, everyone needs to put in some measure of time to achieve their dreams. Start off by limiting or getting rid of time killers like TV. Then dedicate an appropriate amount of time towards your goals like learning about finance or a setting up a side-business. I find time to read or draft a post for this site during my daily commute.

4) Lack of role models - This is something I'm struggling with. From the time I can remember, everyone I knew who was employed had a nine-to-five job. Success was defined as getting a raise or promotion or a better paying job. The few in my family who had tried their hand at being self-employed had failed and therefore, being an entrepreneur had a negative connotation for me. Forget about investments - no one I knew invested in the stock market. This single-salary mindset is a huge obstacle I am having a hard time overcoming.

5) Risk aversion or lack of it - I must have been born without the 'risk-taking' gene. I simply loath risk and try to avoid it as much as possible. This is why I am not yet 'prosperous' even though I have no debt. Being risk-averse has its advantages: when everyone else was buying houses via sub-prime loans, we were saving up for a 20% deposit and avoided the negative effects of the recent housing bust. But while it's healthy to an extent, you don't get huge payoffs without taking big risks either. On the other hand, as any gambler can attest, taking on too much risk is detrimental to financial success. Therefore, the goal is to find a healthy medium. My plan to overcome risk aversion is by starting with baby steps. I'll get my feet wet in the stock market with a minimal amount and see where it takes me.

What other obstacles have you found impeding your success? How did you go about overcoming them?

image by technotr 



  1. I use a strategy I learned about a long time ago, called core and tactical. Keep 90% of you money in safe mutual funds, etfs, bonds. Then with the 10% use to buy stocks.

    Being debt free means being able to experiment more with money and side businesses... But it's definitely not even close to financial nirvana. It's just the 2nd step towards being financial independent.

  2. It seems that it's such a broad topic that it can be completely overwhelming to people at first so they just avoid it. It's almost like mastering another hobby cause it takes so much time to learn everything.

    An obstacle many people encounter is peer pressure to do whatever their friends and family do. It seems that this would be a huge obstacle to overcome, especially if they weren't supportive of you learning to become financially free.

  3. And I think many people just don't know where to start in climbing out of their PF issues. Plus, not having a role model. The blogging community is a great source for keeping up to par on my finances.

    If you don't blog, pick up a few good PF books and Start Reading. I love the Millionaire Women Next Door - makes me hyped to climb out of my negative NW!

  4. I think you are doing great. It's okay to grow in increments and debt free is a terrific accomplishment in our consumerist society. Take your time figuring out how you want to grow. Do the research and maybe invest in some classes in a field that both interests you and will help you build some confidence in your entrepenurial abilities...not everybody is designed for leaping without looking and I think that's a good thing.

  5. An excellent review of common obstacles... and not one of them can't be overcome easily! The only one that takes any real effort is the education.

  6. I have been educating myself about finances for about 10 years. You can never learn enough. You also need to know your risk tolerance. You have to be able to sleep at night with your investment choices.

  7. TG - Don't limit your risk aversion to the stock market only! Before you invest any money, start being risk adverse by researching investments you aren't familiar with...try to learn as much as you can!

    To tie points #1 & #5, people's aversion to risk can also lead to their avoidance of educating themselves (and therefore lack of knowledge).

    My obstacle #6: Game-changers. It seems like something is always changing. Education is partly so hard because you've always got to stay on top!

  8. Hey, maybe I'm being dim but I can't find a way to get a permalink to this article.

    If so you need to fix it, as it's hard for people to link to you! :)

  9. Hmm, update - submitting the comment created the permalink. Weird!

  10. Actually, I think that starting out with knowing our financial obstacles already lets us win half of the battle against our financial downfall.

    Nobody was born to have the financial talents, and the problem that we have is that this subject is not a part of our current school's curriculum.

    And that is an advantage for people who are in a financially literate family.

    But it is our duty to learn about it and practice it in our daily lives.

  11. You can shake the conscience of poverty and become aware of the money. Both are attitudes that are under their control. If you are a strong enough desire to achieve financial success can be reached.

    islamic finance training


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