The Five Enemies of Your Financial Success

The path to financial success is actually surprisingly simple.

Spend less than you earn. Do something sensible with the difference.

That’s it. If you do that each month, each year, each decade, you’ll have quite a lot of financial success. Debt will melt away. Retirement savings will go up, up, and away.

If it’s that simple, then why doesn’t everyone do it? If it’s that simple, then why are 78% of Americans living paycheck to paycheck?

The reason is simple: Although the path is incredibly straightforward, there are many enemies along the way that will knock you off of that path. They pop up constantly, in different forms and in different numbers, and if you’re not ready to handle them, you will fall right off the path to financial success.

These enemies come in many, many different flavors, but they can mostly be boiled down to five groups, with different tactics for handling each one.

Enemy #1: Bad Habits

In other words, you have bad day-to-day routines in your life, ones that add up to a bunch of unnecessary expense. Those bad routines by themselves won’t entirely disrupt your progress, but they will slow you down and they will make it easier for other enemies to knock you off the path.

These bad habits and bad routines wear many faces. They take the form of your monthly bills – some are overinflated (like your energy bill), while others are unnecessary (like your cable bill). They take the form of ordinary expenses that you incur multiple times a month without really thinking about it, like eating out for lunch or hitting the coffee shop or buying convenience foods at the grocery store or skipping over the store brands that you’ve never tried in order to use the more expensive name brands.

People are creatures of habit. Once you firmly establish a routine, you’ll probably stick with it for a very long time, usually until something disrupts that habit. Disrupting a habit without some big life change (like moving) is hard.

Here are a few tactics for defeating this enemy.

Keep track of where every dollar goes. At the end of each month, sit down and go through your bank statements and credit card statements and identify what exactly each and every purchase was for. Was it a sensible purchase? Did it add real value to your life? Can you even remember what it was for? (Hint: If you can’t remember, it was probably a bad purchase.) Look for patterns in what you’re observing, especially in the less worthwhile expenses. Are the bad expenses popping up regularly in certain locations? On certain websites? Those are bad habits that you should be breaking.

Reconsider every single regular expense; if it repeats, particularly once a month (like a monthly bill) or more, carefully re-evaluate it. If a specific expense is repeating in your life, like a monthly bill or a thrice-weekly stop at a coffee shop or a once-weekly stop at a hobby shop, ask yourself seriously whether that expense needs to continue and, if so, whether or not it can be cut in some fashion.

Cut down most of those expenses to the bare minimum, then build them back up as needed. Once you’ve identified a bunch of regular expenses, it’s a good idea to trim them to the bare minimum and then, if you find that this isn’t working for you, restore just the expenses you’re missing. Try switching all of your regular purchases to store brands, for example, and then only switch back if the store brand doesn’t work. Try making cold brew coffee at home in the fridge (it’s easy and cheap) and then switch back to the coffee shop if you’ve tried it a bunch of times and can’t make good coffee (I really doubt this will happen).

Enemy #2: Bad Advice (from Everywhere)

When people think of “advice,” they tend to think of themselves asking for help or looking for help on something that troubles them in life and then finding someone they trust to give them an answer. Typically, that’s good advice… but that’s not what we’re talking about here.

We’re talking about bad advice. We’re talking about advice or suggestions that have no real consideration of your actual life, your actual wants and desires and goals. We’re talking about suggestions shared in the media for products you “need” (but don’t actually need). We’re talking about lifestyle suggestions that have nothing to do with your actual wants or desires or life. We’re talking about marketing ideas that are far more about selling a product than about improving your life.

Bad advice is everywhere. It’s on television. It’s on the internet. It’s on social media. It can come from the mouth of your best friend or from an overheard conversation on the street.

How can you defeat the enemy of bad advice?

Cut down on your media diet. Spend less time watching television. Spend less time online. Spend less time on social media. Replace that with actually doing things. Go on a hike. Make a great meal. Read a book. Learn a new skill. Have a party. Start a garden. Do something – anything – just cut down on your media intake.

Find ways to spend time with friends that don’t involve spending money. If you’re going to do something social, make sure that it’s not something oriented toward spending money or talking about products or things you want. Avoid retail therapy. Do things at each other’s homes or at a free public location like a park.

Look for multiple sources of advice, including experts, before you make a financial move. Whenever you’re considering making a financial move or looking for strategies for improving your situation, look for a number of different sources before making a major move. Don’t just trust the word of the salesperson or agent, and don’t just trust the word of a single article in a major publication. Look around for several sources of advice and go with what they suggest as a whole. One single point of advice might be wrong; a bunch of different points of advice, mostly in alignment with each other, are much more likely to be right.

Enemy #3: Temptation

We’re all tempted in our daily lives. We’re tempted to be lazy. We’re tempted by treats and perks and pleasures. We’re tempted by the good thing we can have right now.

The catch, of course, is that temptations are distracting. They grab our focus and pull us away from the big picture. They demand fulfillment right now without any real concern about what might come later.

Spontaneity can sometimes be fun, sure, but when spontaneity drains away lots of resources and cuts off future plans, it becomes a problem. When giving into temptations means giving up on big plans and goals and dreams, it’s usually a bad choice, even if it seems really really desirable in the here and now.

How can you tackle temptation?

Practice the 10-second rule. The 10-second rule is a wonderful little trick you can practice any time you’re about to make a purchase of any kind or about to put something in your shopping cart. All you have to do is pause for 10 seconds, and during those 10 seconds consider reasons why you shouldn’t buy this item. Don’t think about why you should buy it, but why you shouldn’t. Do you really need it? Could you get it cheaper elsewhere? Is there a better option for your needs? Couldn’t this wait until later? Most of the time, non-essential purchases will go right back on the shelf.

Practice the 30-day rule, too. This is a nice supplement to the 10-second rule above, and it pertains very nicely to nonessential purchases of any significant magnitude (for me, the minimum level is the price of a book, about $10). If you have the desire to buy a nonessential item, simply give it 30 days to rest. In 30 days, consider the item again – do you still want it? If so, then start bargain hunting for it, and you can do it patiently because you’ve already observed you don’t need it right away. If not, then just forget about it. I find that about 90% of my wants just go away if I apply this 30-day rule to it.

Delete your credit card number from online accounts, and don’t keep your account login information saved. One very easy way to give into temptation before having a chance to think about it is to simply order things with just a click or two online without having to enter payment information. There’s nothing wrong with buying online, but when you can go from “impulse” to “ordered item” in just a few seconds, it’s really easy to just let temptation run the show. For example, I often run into this with Kindle books – I know very well that I order more than I should, and this depletes my monthly hobby spending more quickly than I’d like. The simple step of removing credit card and account information in as many places as I can keeps me from a lot of little impulsive purchases.

Enemy #4: Bad Perspective

Human beings have a few psychological quirks that served us very well in life up until roughly the industrial revolution, but don’t serve us particularly well today.

One of those quirks serves as a giant enemy on the road to financial success, and that’s our natural tendency to focus strongly on the short-term perspective rather than the long-term perspective. We put far more weight on today and this week than we do on next year and the rest of our lives.

Sure, we’re able to think about and consciously plan for our future, but it’s often very nebulous thinking and planning. Most of the time, we play it by ear, and even when we have the best of intentions, short-term objectives and desires will trump long-term objectives and desires unless we’re very diligent about focusing on the long-term perspective with our thinking.

How is that bad? If we focus on the short term as a top priority rather than the long term, it becomes so much harder to save for future goals like retirement. The benefits of saving for retirement are incredibly obvious and important, but because it’s a long-term goal, the average person doesn’t do it very well. A large portion of Americans have nothing saved for retirement, and among those who do, many just have a trivial amount that’s often just what their employers automatically put aside for them.

We’re bad at long-term thinking in the moment. How can we change that?

Consider your spending choices from a five-year perspective. If you’re about to spend money, ask yourself whether, five years from now, you would consider that expenditure to be a worthwhile one. Will your future self think that this purchase was really worthwhile at all? If your future self would think of this purchase as not a very good use of money, then you should strongly consider leaning against it. What I’ve found is that this line of thinking tends to push me toward minimal spending on myself, though it does encourage social spending and self-improvement spending. I often pair this thinking with time use, something which I’ll get back to in a few paragraphs.

Consider what a series of unfortunate events does to your life, and come up with a realistic plan for handling most of that impact. What exactly happens to you if you lose your job and your car breaks down on the same day? How do you handle that? What if you’re suddenly diagnosed with a serious illness at the same time that your oldest child moves back in with you? How do you handle those kinds of extreme events? If you don’t have an answer that will help you handle a large portion of the impact, then you need to be planning ahead for that impact. Start a big, healthy emergency fund, for starters, and start taking steps to strongly reinforce your career. You should automate those plans by, for example, setting up automatic transfers from your checking to your savings account (for an emergency fund) and scheduling and blocking off time for career improvement. Make it as easy as you possibly can to keep moving forward with those plans.

Consider how you spend your time in a given week and ask yourself if there’s not a more personally fulfilling and worthwhile way to spend that time. How much of your time is just wasted in a way that you can’t even really identify? How much of it is wasted on things that provide no long-term value and little short-term value (like aimless social media or web surfing or watching unplanned television)? That time is just lost, with no purpose. Start finding ways to cut that lost time, and start using that time for things that will provide value to you now and over the long term of your life. Learn things. Exercise. Get in better shape. Take on tasks that will save you time later, like preparing meals in advance.

Enemy #5: Lack of Knowledge

One final obstacle that stands in the way of financial success is simple lack of knowledge. You might be able to identify that there’s a financial problem in your life, but you really don’t know how to fix it or how to ensure that it doesn’t happen again.

Usually, financial solutions are pretty simple, but if you’ve never been exposed to the solution to your problem, solving the problem can feel like a tremendous obstacle. This is the value of education – it can take an unanswered question that seems incredibly difficult and complex and break it down into something simple that you can understand and handle and put into action.

Here’s how to do just that.

Read personal finance books and independent personal finance sites. If you’re struggling with personal finance as a whole or don’t understand broad topics such as investing or debt repayment, the best approach is to grab a personal finance book from the library and dig in. If you thrive on seeing those solutions through the filter of a person’s real life, then an independent personal finance blog (like this one) is a great additional tool. Both can teach you what you need to know – the books provide the core knowledge and the blogs provide the examples and relatability.

If you hear about a financial topic that you don’t understand, take the time to understand it and integrate it into what you already know. So often, people will start learning about a personal finance topic, understand 75% of it, and then get lost on the other 25%. Rather than stopping right there and fixing that deficit, they nod and move on. Don’t do that. Whenever you come across a point or a subtopic that you don’t understand, stop and learn more about it. Don’t come back to the bigger topic unless you understand the specific point that’s being made.

Why? It’s often the case that later points build upon and rely upon earlier ones, so if you don’t understand the earlier ones, you almost never understand the later ones. Plus, it’s much easier to stop and learn about a point when you first encounter it, because learning about that single point when you first find it is likely to be quite easy in comparison to trying to figure out where you went wrong later on.

Don’t inherently trust the words of an advisor; do the research and figure things out on your own. You should never, ever make major financial decisions based on the advice or ideas of a single person, whether it’s a book or a blog or a financial advisor. Don’t take one person’s word for it if it’s a major decision that will have big ramifications in your life. Before making a choice, consult other sources. Verify what a website is saying by looking at other websites and at books. Verify what an advisor is saying by looking at websites and books. Verify what you’ve learned from books with other sources of information. Don’t just rely on one source (and, yes, that includes The Simple Dollar).

Final Thoughts: Fighting the Battle

The real challenge of personal finance success in the modern world isn’t following the path to success, which is easy, but in fighting the many different enemies that block your path and force you off of it. It is those who overcome those enemies and keep on the path that find financial security and, eventually, financial independence.

You won’t be successful in every battle – no one is. However, if you manage to turn a few losses into wins, you’ll find yourself moving faster and faster down the path, with more confidence and momentum than ever before, and that alone will go a long way toward bringing you the success you desire.

This is your journey. There are many who stand in your way. Are you ready to take them on?

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Trent Hamm

Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.