“Becoming rich is nothing more than a matter of committing and sticking to a systematic savings and investment plan.” David Bach, financial adviser and author
Wouldn’t it be wonderful to do everything you wanted to, without ever worrying about money? Imagine a life of financial freedom, with enough money to live well for the rest of your life.
This might seem like an impossible dream at a time when the average American has personal debt of $38,000 (excluding home mortgages), according to Northwestern Mutual’s Planning and Progress Study.¹
However, it is possible for anyone to build wealth, no matter how large or small their income is. It takes knowledge, time and commitment — and a positive mindset.
Your mindset is probably the important factor because your fears can stop you from creating wealth. Here are some common financial fears and how to deal with them.
If I invest my money, I might lose it all
You’ve heard stories about people who lost all their money in one day after the stock market crashed. You may even know someone who has made a loss on their investments.
So, even though you know in theory that investing your money can lead to excellent returns, you’re scared to take the plunge, just in case you’re left with nothing.
The truth is, if you leave your money in checking and savings accounts, it’ll grow at lower rates than inflation, so it will lose value over the long term. Investments offer much better prospects for increasing your money and creating wealth.
If you’re afraid of investing your money, build your confidence by starting with lower risk investments, such as certificates of deposit (or fixed long-term savings), government bonds (gilts) and money market accounts.
If you don’t have much money to invest, why not give robo-investing a go? You can start investing with just $1 and the fees are low. You choose your level of risk and your portfolio is set up and managed for you automatically. Websites like Acorns and Betterment offer robo-investing services, which are particularly suited to new investors.
Once you have some experience of investing with low-risk options and have reaped the rewards, some of your fear connected with losing all your money will disappear. You’ll start to feel confident enough to put some of your money into investment opportunities that carry a higher risk but also a potentially better return.
Whatever type(s) of investment(s) you choose, ensure you have a diversified portfolio that allows you to spread the risk.
I don’t think it’ll ever be possible for me to be rich
If you don’t set financial goals and work towards them, the chances are that you’ll never become rich. If you’re in the habit of spending everything you earn and more, then it’s very likely that you’ll continue to do so whenever your income increases.
To break this habit, sit down and set yourself some financial goals. If you’re afraid that you won’t achieve your goals, build up your confidence by setting and achieving small goals at first. These could be:
· Saving $50 a month for 6 months — giving you a total saving of $300 plus interest.
· Paying off one debt in the next 6 months — this could be the debt with the highest interest rate.
Once you’ve set those goals, don’t give up on them, even when unforeseen things happen. If you can’t make a payment or save a certain amount one month because you have an unexpected bill, then don’t worry about it too much, just carry on as usual the next month. If you can save or pay extra in the next month, then do so, but don’t force yourself. It’s OK if you take slightly longer than expected to achieve your goal.
Once you’ve achieved your initial goals, move forward by setting yourself some new financial goals. This could be investing the money you’ve saved or starting to save regularly, if you’ve just paid off a debt. You could transfer the same amount of money you’ve been using to pay off your debt into a savings account each month.
The truth is that it is possible for you to become rich, but it probably won’t happen quickly and easily. It will take hard work, commitment and determination. It may take many years or even several decades, but if you continue to move forward, step by step, it will be possible.
The most important thing you can do today is to set just one small financial goal that will help you move forward on your journey towards wealth.
Once you’ve set and achieved each goal, new opportunities will appear in front of you on your journey to wealth.
I’ll never be wealthy because I’m just no good with money
If you’ve had financial problems in the past, you may believe that you’re “just no good with money”.
In order to become “good with money”, there are many books you can read, and seminars and workshops you can attend. These will teach you both the basics of money management and more advanced ways of growing wealth.
Set a goal of reading just one financial book, going to one workshop or doing an online financial course in the next month. You’ll become wiser and you’ll have renewed enthusiasm to manage your money well and move forward with your financial goals.
If I save a lot of money, I won’t be able to afford the good things in life
It’s true that, in order to save and invest money, you’ll need to spend less than you do now. This may mean eating out less often, buying a reliable second-hand car rather than a top-of-the range new car, or keeping your electronic gadgets until they break rather than replacing them every time a new model is launched.
Why should you do this? Why shouldn’t you have fun buying what you want right now?
Think more of the longer term. What would you like to do with your life? Do you want to continue working in a job that is less than fulfilling until you’re 65 or perhaps older? Would you like to retire earlier than that and spend more time doing the things you enjoy?
Write down what you’d like to do in your life and/or create a vision board or scrapbook with images of your ideal life. Get excited about all those places you want to visit and all those experiences you’d like to have.
Let this vision of your future inspire you to make sensible decisions today. Start a budget and stick to it. Pay off your debts. Start saving. Before buying something, ask yourself if you really need it, and, if so, is there a less expensive option?
When you’re tempted to buy something you want rather than need, think of your future self. Will he or she thank you for the decision you’re about to make?
That doesn’t mean that you should deprive yourself. It’s important to set a budget for “fun spending” — money you can spend on anything you want without guilt. However, it’s equally important to invest a portion of your income in your future.
Move Forward Today!
Don’t let fear stop you from building a wonderful future for yourself and your family. To combat your fears, take one small step forward today, whether it is booking a financial workshop, setting a financial goal, or writing down what you’d like your future life to look like.
Remember that creating wealth is within your power, so don’t let fear hold you back any longer.