Balancing Act

Note: This article was published April 20th but was deleted in error and re-published.

-Jason Rosen

Seems like a strange question but there do seem to be a few things that keep some of us from reaching our full potential for wealth.

What are the 7 sins, you ask?. Well, step right this way and we will let you in on a few tips for achieving greater wealth.

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1. Jonesing to keep up with the Joneses
Trying to outdo your neighbors is a self-imposed trap. You will waste countless dollars trying to impress people who really are not that important in the grand scheme of things. Worse yet, there is a hidden cost that comes from keeping material items that are unnecessary. The money spent on purchasing and maintaining these status items has a corrosive impact on your ability to accumulate wealth. Moreover, the time, energy and emotion spent trying to keep up in this artificial way tends to cloud your judgment and take you further away from your core values.

2. Instant gratification
Credit is an incredible tool that can give you amazing wealth building powers if used properly. Used improperly, credit can have a crippling effect on your future wealth. Using credit instead of saving to purchase consumer goods is bad. Often we don’t need whatever we are using our credit card for. Purchasing crap on credit only lines the pockets of the credit card companies.

Another reason not to use a credit card for frivolous purchases is that the sense of instant gratification is fleeting and can again cloud your judgment. Did you really get the best price for that thingy? What was the real cost once you factor in the interest charged to carry the debt load?

Consider this: A $2,000 computer purchased with a credit card that charges 10% would cost $550 more to pay it off in 5 years. And if it takes you 10 years to pay off your credit card debt that $2,000 computer will cost $3171.62. And if you are reading this you probably already know that your computer won’t be around 5 years from now, much much less 10.

Have some patience and save for life’s little (and not so little) extras.

3. That bad habit is hitting your wallet!
Fixing a bad habit is tough but if you are looking for a good reason to fly right consider the cost of indulging your bad habit. Smoke? Overeating? Excessive drinking? Speeding? Pick your poison and that nasty habit chokes off your wealth. Sure, there is the cost of the smokes, booze etc. But that is really only the beginning. Smoking, for example, creates higher health insurance premiums and by extension is more likely to land you in the doctor’s office for various illnesses large or small.

Speeding - my favorite - takes more fuel, generates wear and tear quicker, and while I hate to admit it, contributes to tickets which in turn contributes to inflated insurance coverage. Oh yeah, and the value of the car depreciates faster too. So while it’s fun to nail the throttle, there is a hidden cost somewhere in there.

4. Failure to plan
You have a goal, don’t you? Well then, how are you going to accumulate wealth if you have not established savings goals? Sadly, wishing to be wealthy simply will not work.

You need to establish where you want to be and how you are going to get there. This perhaps is one of the most difficult things to accomplish if you have not done this before. Reaching a goal takes determination and practice and, well, effort.

Identify what it is that you want. Map out how you are going to accomplish your goal. There is much to be said about the the power of goal setting but we will cover that at another time.

5. It could never happen to me
Just like Baden-Powell, father of the Boy Scouts, declared, “Be Prepared!” Calamity, accidents, just plain crap happens all the time. Most of the time this means extra money is going to be required. So plan ahead. Have an insurance policy. Don’t let a disaster wipe you out financially. Emotionally it can be difficult to recover from such a large financial loss.

6. Easy money and the quick buck
You have heard the saying “Easy come, easy go.” Keep this in mind next time you are tempted to make a quick buck. Wealth takes time. Wealth takes, as you might have guessed, discipline.

While we sometimes hear of stories where someone received a huge windfall, the search for the quick buck usually leads down a self-destructive path. Don’t be foolish with your coin. Be patient and disciplined in your path to wealth and you will be rewarded with a wealth that lasts a lifetime (or longer).

7. Fear
Have the courage to be honest about your financial situation and have the confidence to make your own financial decisions. The truth is that you are your ally when it comes to your money. Friends, family, financial advisors, planners, brokers and like are useful for providing the ideas and for education. But you are always capable of making decisions that are in your own best interest.

Never forget that it is your money; ultimately you have the responsibility to make the decisions as to with whom, how and where your money is invested.

Fear can be a great thing; it’s the emotional reaction that keeps us on the right side of common sense. However, too much fear can mess up your wealth building skills. Paranoia of loss and financial paralysis can keep you from making sound investment decisions.

The key is to understand the risk and the reward associated with your investments. Risk is not all bad. Everything in moderation. A calculated risk can add $$$$ to your bottom line.

Be honest with yourself. If there are areas that you can fix don’t just ignore them thinking the problems will go away.

Ultimately, creating wealth is very possible. You just need to keep these financial sins in perspective and at bay. Wealth does not usually happen by accident. You have to be proactive in addressing your financial situation.

Avoiding these 7 sins will have have the financial heavens smiling upon you.