• May

Five Phrases Preventing You From Achieving Financial Success

Updated: Mar 27

It might come as a shock, but your mindset could be preventing you from building wealth.

Woman with a headache

We talk to ourselves in our own head daily. What we may not realize is that the words we tell ourselves might actually hurt us than help us. In order to achieve financial success, the first step is to acknowledge the negative phrases we tell ourselves. Take a look at some common sayings below - do any of these ring a bell?

1. "Finance is hard - I'm not good with numbers."

There's a lot of fear behind this sentence. Why are you feeling this way? Is it because you don't know anything about personal finance? People always assume that they have to be good with numbers in order to master personal finance. That's not necessarily too. Are there numbers involved? Yes. Can you read the numbers? Yes (hopefully). In that case, you CAN learn how to build a budget, how to invest in a Roth IRA and plan to buy a house. Mastering personal finance just takes practice - much like riding a bike!

2. "I don't need to learn personal finance. My significant other handles all of this."

Whenever I hear this, I think of the phrase "Ignorance is bliss." You don't have to worry about it because someone else is. I dislike this phrase because it suggests a power imbalance in the relationship. One person sees the big financial picture and the other is completely left in the dark. Why is that important? Well...a few reasons. First, marriages and relationships don't last forever - over 50% of marriages end in divorce. That means, between you and I, one of us will be divorced. I feel pretty confident I can manage my finances on my own if I were to get a divorce - do you? If not, now is the time to start learning.

Second, when one person manages the finances in a relationship, that's a financial red flag. The other person's financial goals aren't being taken into consideration. What percent of your income are you saving? How much are you saving towards retirement? If you're not able answer these questions, it's time for a change.

3. "Investing is too risky. I can't afford to lose the money that I have."

Investing in the stock market can be scary, especially when you don't know the first thing about investing (it's that fear talking again). But let me tell you, the stock market is not as risky as it seems. The average annual return in the stock market from its' inception in 1926 to 2021 is 10.4%. 10%! You can't get that kind of growth in a savings account or in a CD.

The best part is that you don't have to pay attention to it every day either. Purchase a few exchange-traded funds (ETFs) and don't check your account until a year from now. Still feel unsure? I wrote a whole post on how to start investing in the stock market.

4. "I don't need to worry about personal finances right now - retirement is so far away."

I used retirement in this case, but it can be any milestone like planning for a wedding or buying a home. This is a mix of fear and laziness. It might seem like you have a lifetime to save, but it actually takes less pressure off of you later if you start investing now.

Whether it's a 401K, Roth IRA or a self-directed account, investing now will result in better yields compared to waiting until later on. One of my favorite charts is from a US News article about investing (see below). It shows you the difference of your portfolio size when someone starts at the age of 25 and stops investing after 10 years compared to someone who starts investing at age of 35 and continues until retirement. As you can see, the blue line (Jack) is higher than the green line (Jill), even though the green line has been investing longer than the blue line has.

investment growth chart comparing when someone starts investing
Source: US News

5. "I'm already contributing to my 401K, I don't need to do anything else."

While a 401K is super important, it's not always enough for retirement. You're capped on what you can contribute each year, you're limited in the investment options you can make and you will get taxed when you start taking withdrawals of your 401K at retirement. While you might be extremely happy and proud of the balance in your 401K (and you should be!), you do need to account for the taxes that you will need to pay for when you withdraw money. This is why having a backup plan is important. You don't want to wait until 65 to find out you don't have enough money to last through your entire retirement!

Feel like these phrases are speaking to you, but don't know how to get out of it? Schedule a 1 HR financial coaching session, where we will talk through some of your roadblocks and personalize a plan to help you reframe your money mindset!

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