If you’re reading this, you’re always worried about money. When you think of your expenses and responsibilities, you cannot sleep. You wonder whether what you have will be enough. Financial security is a state of mind. When you have financial security, you’re confident that your earnings will cover all your expenses. The following are some of the roadblocks that prevent you from achieving financial security.
1. Bad Personal Finance Habits
You receive your monthly paycheck and rush to the mall to buy the latest items on sale. You don’t really need those items because you have similar ones back home, but since it’s a sale, you don’t want to miss out. Bad spending habits are the number one roadblock to attaining financial freedom.
Why do you feel the need to spend money on things that won’t add any value? If you already own a bag, do you really need another? Even if it’s a designer bag? When you feel the sudden urge to spend money, control yourself. Don’t buy the item. Tell yourself that you’re going to buy it after a week. If the item is really important, you’ll remember to purchase it. However, if it isn’t, you’ll forget and end up saving more money.
2. Lingering Legal Problems
Let’s say you’re injured in a hit and run car crash. The need to find a lawyer for your accident becomes very important. The same goes for any other situation where legal representation is required. Unfortunately, civil court cases can take years to resolve. Too many people get caught up in their quest for justice that they don’t realize how much they’re spending.
Avoid lawsuits as much as possible because they have the potential to bankrupt you. If possible, settle the matter out of court. You’ll save thousands of dollars in legal fees.
3. Housing Expenses
The average American spends 31% of their income on housing. That’s a lot of money if you add the other expenses. Paying rent or mortgage sets you back financially. Think about how much money you’d save if you didn’t spend three-tenths of your income on housing.
If you want to lower your housing expenses, find a roommate. That way, you’ll use 15% of your income on rent. If you are paying your mortgage, rent out the other rooms. Then, use that rent money for housing expenses. That way, you’ll save 30% more.
4. Missed Opportunities
You’ve just received your bonus, and you’re thinking about what to do with the money. Assume that you’re saving for a house or car, you’ll want to put that money in the savings account. But think about the rate of return. If you invest that money in the securities market, it will triple in two years. All factors show that the stock is going to increase in value.
However, since you don’t know anything about investing, you play it safe and save your money. You’re more content with your money doubling in 10 years. The cost of a foregone alternative is what we refer to as opportunity cost. This simple and often misunderstood concept has left many with regrets.
5. Vehicle Expenses
Owning a car is a major life achievement. It allows you to go from point A to B without worries. However, buying a car too early will cost you. What do we mean by too early? If you used up a large chunk of your savings on the car, that’s too early. A car is going to cost you to maintain. Think about gas money, insurance, and service charges.
To minimize your car maintenance costs, don’t drive it every time. Use it only when necessary. You can walk to the grocery store or carpool to work. Alternatively, you can rent out your vehicle or convert it into a taxi. That way, you earn from it.
The above are some of the major obstacles that impede your financial freedom. You wonder why you still need your job after working for over a decade, it’s because of the above reasons. Change your behaviors and stay committed to the cause. That’s the only way you’ll achieve financial security.