Temptation can be right around the corner.
Whether you are just starting to invest or are a seasoned professional, you are only human. That can mean being distracted from your investing plan and from getting the compound interest to help you build wealth and a better life.
The best way to avoid these common financial mistakes, as with anything, is to be prepared beforehand instead of dealing with them as they appear.
To be prepared, you must first know them. So let’s dive in:
#1 - Greed
Taking care of your personal finances is crucial, no doubt about that.
However, constantly thinking about money to the point nothing else matters on your mind can have two unintended consequences.
On the one hand, you can become consumed by the thought of becoming rich, making you more impatient and even prone for getting involved in get-rich-quick schemes.
On the other hand, you should remember that money is a tool to achieve your goals, and not an end in itself.
A good financial plan should be balanced and adapted to what you want from your life.
#2 - Lust
The mere thought of spending money can be exhilarating for some people.
A shopping spree may be just a way to have fun and elevate their mood. Which is why there is such a term as retail therapy.
The danger lies in spending money you don’t have, or that would be better allocated considering your priorities.
To prevent yourself from going overboard, remember to spend with purpose. Focus on what you actually want to buy, not on the spending action.
#3 - Wrath
Your money situation can be a source of anger - if you let it.
There are always some ways which you could be doing better, but building a more solid financial future is a marathon, not a sprint.
Keep in mind that strong emotions like anger and fear may lead to hasty decisions that work against you.
So relax and take one step at a time. Trust your plan, keep learning and adapting.
#4 - Gluttony
Here the focus is less on spending, but on having.
Beyond mere collections, sometimes the temptation can lie in accumulating things that, not only we don’t need, but sometimes can’t even keep track of.
A little indulgence now and then is acceptable, but make it constant and you end up sacrificing a great deal of potential earnings, not adding much of a positive effect to your life.
Again, your plan is your best friend, and the 72-hour rule can help.
#5 - Envy
Each person has their own financial journey.
It’s only natural to compare yourself to others, but doing so is a way to lose focus on your own goals and your own path.
The measure of success is not where you are compared to others, but where you are compared to where you were.
This way, you are able to have a clearer perspective on areas you can improve. Thinking about how nice it could be to be on someone else’s shoes, however, won’t help you move forward.
#6 - Pride
The other side of the coin.
Other people still take much of your mental space, but with a focus on how they see you.
Buying and spending become a matter of status, which can drive some people to neglect their actual needs, ignore their future and go deeper into debt.
So while some attention can feel good, just remember that it won’t help when you retire.
#7 - Sloth
Not because you think it’s a good idea or you don’t want to improve.
You know you should start investing or take your earnings further, but there’s always an excuse to justify not taking that first step.
Things like it being too difficult, complicated or expensive - these are no longer necessarily true, considering the vast choice of options you can choose from.
Getting started can feel hard, but once you begin it’ll become easier.
And don’t forget: the sooner you start, the further you can go.
What’s next? Share this article and help others beat temptation.