Everyone has financial challenges, or even a few, that we face. There are no exceptions, even for us!
As we started our financial journey, we had to overcome a few of these financial challenges. Now as Financial Coaches we help others learn to manage their finances, and conquer them so they can reach their goals.
If you want to improve your finances, you need to recognize what is holding you back. It might surprise you that these challenges have little to do with the amount of money you make or your family’s financial background. Instead, they all start and end with you and your mindset. Because in our experience, so much of what is going on with your finances is a mental game. The way you think about money can have just as much impact on your financial success as your income..
By changing the way that you look at the following financial challenges, you will start to make progress.
Top Financial Challenges
- Waiting Start
- Overcomplicating Things
- Looking for Unicorns
- Lacking Priorities
- Not Working Together (if your in a relationship)
Waiting to Start
This is one of the most common financial challenges. Despite fully understanding the importance of paying off debt, saving, budgeting, etc. We tell ourselves a story that “now is not a good time”. Over time, delaying becomes a form of self sabotage that keeps you from the life you want. Even worse, waiting for the “right time to start” comes at its own cost and has serious financial implications.
Waiting to Start Means Missing out on Time in the Market
You lose out on the benefits of investing early, time in the market and compound interest. But you also put yourself in a situation when you are 35-40 years old and you’re forced to play catch up. This mistake makes it harder to have enough money in savings and investments by the time you reach retirement age. Putting a lot of pressure and demands on your income.
Waiting for the Right Time Instead of Making Time
Waiting for the “right time to start” feeds an illusion that someday there will be a more ideal time to begin. Telling yourself that sometime in the future things will align themselves perfectly, and then you can get started! You try to convince yourself that things will calm down, and life will stop being so busy. But in reality, that day will never come. The only day you have is today, and the only time to start on something that is important to you is now.
Waiting Until You Make More Money
One of the most common reasons people wait to improve their financial life is their income. They believe they need to reach a certain level of income to make it “worth it”. But the fact is, you don’t need to make a lot of money to manage it well. In fact, avoiding getting started now will make it even harder for you to get better when you make more money. The odds of ever building wealth decrease significantly if you don’t have a strategy early on. Instead it will leave space for lifestyle creep and keeping up with the joneses, which eats at every raise and every bonus. Meaning you need a bigger and bigger income just to maintain.
The worst case scenario here is waiting to get started and then disaster strikes. You can wait for the right time and then, when an emergency happens, it only moves you further behind. Our point being, the right time to get started is never going to come, but the rainy days will. Will you be ready?
The person who struggles with overcomplicating their finances is usually overthinking everything. Which to be honest – is completely fair! Without an education in personal finance and having never been taught how to do these things, it can feel like fixing your financial problems or becoming wealthy needs to be really complicated.
Hard doesn’t necessarily mean complicated.
While we completely understand this train of thought, it is definitely holding you back! It is our belief that hard doesn’t necessarily mean complicated. Learning to live on less, changing your financial habits and behaviors, learning new skills, etc. are all challenging and take discipline. But the actual management of your finances should be incredibly simple and easy to understand.
Sometimes overcomplicating how you manage your money is a result of you believing that it should be complicated. We hear a lot of people with the narrative that “it must be more complicated, otherwise I would be having more success than I am!” and while we can see why you might think that, it simply is not true. But to achieve a simple process, you do need an understanding of not only personal finances, but a clear picture of how you’re doing and a goal of what you want to accomplish.
The real challenge with overcomplicated things is that it can make it difficult to know what actions you need to take. When your strategy is complex and difficult to understand it creates a lot of mental work to manage. This is the opposite of optimized and it’s definitely not streamlined – which are two things we believe every financial strategy should be!
Trying to Find “The Best”
Looking for “the best” solution to your money problems is a financial challenge we are probably all guilty of at one time or another. Although well intentioned, this often becomes a huge waste of time. Believe it or not, looking for “the best ” can actually be another form of self sabotaging behavior, whether conscious or subconscious.
Looking for the best solution usually comes down to the best outcome for the least amount of effort. While sometimes these things are good, more often than not you’re searching for unicorns i.e. things that don’t exist!
In addition to seeking a solution that may not be out there, trying to find the perfect solution leads to extreme analysis paralysis. In the process of trying to find what you’re looking for you get stuck trying to make a decision. This of course delays taking any action and in this case time really is money!
Anything that pushes out your timeline of improving your finances costs you significantly. So if you tend to over analyze what budgeting app to use etc. Try to be mindful of the cost of doing nothing.
When you’re trying to improve your finances, it can be tempting to want to fix everything all at once! But trying to do too much at once, with everything set at “Priority:1” is a great way to dilute your efforts and get spread too thin. The danger here is that progress is so slow or minimal that you lose motivation.
There is a reason you do things in a specific order – all personal finance pros agree on this order. But even within that people fall victim to “money multitasking” and trying to do too much at once. For example: trying to pay off debt, while you’re saving an emergency fund, while you’re investing, etc. etc. What people don’t realize is that when they take this approach they slow down their results toward each goal.
In our experience setting priorities can be even more of a financial challenge for couples! Beyond the correct series of events for building wealth. Without the alignment of priorities between the two of you as a team, big life decisions become even more difficult to make.
Not Working Together In A Relationship
Managing money as a couple has its own set of financial challenges and we have plenty of helpful tools about it because it is so important! If you’re in a committed relationship and you want to create a life together and build wealth, you have to learn to work together!
In our experience as a couple and helping many couples, this is usually rooted in issues with communication. Each person has their own money story and financial challenges they struggle with, which complicates things. Not to overlook the fact that talking about money can be difficult and highly emotionally charged, so people avoid it.
Working together as a couple is about respecting the fact that you each have completely different backgrounds, money stories, experiences, fears, concerts, thoughts, etc. You need to master the ability to communicate with one another about this challenging topic. Only then will you be able to come to resolutions and make a plan to build the life you want together.
Steps to Overcome Your Financial Challenges
The good news is you can overcome all of these challenges. It all starts with knowing what your challenges are so that you can face them. Awareness is the first step in making change.
So before you read on, determine which of these financial challenges you are facing and that you connect with the most. Now that you know what your financial challenges are, read through these ways to overcome them.
The best way to overcome this challenge is to start now. Action creates momentum But don’t overwhelm yourself with trying to do everything all at once. Start small. Choose one thing that you know you need to do that moves you in the right direction.
Avoid thinking about everything you need to do at once, that can lead to getting overwhelmed. But instead find one thing you can commit to doing and start trying to make consistent progress over time. Eventually you can build on your progress, which will make it easier to take the next steps.
How to Simplify Your Finances
First and foremost, stop telling yourself that it should be complicated! Have a growth mindset and keep things simple. Have an organized system that makes sense to you. A good litmus test for this is having a financial strategy that you can easily explain to someone else, say your spouse or Financial Coach.
Your system should be set up in a way that you understand how everything is interconnected. You should understand where money is coming from and where it’s going. While also being able to easily see the progress you are making toward any financial goals you have.
Simplicity doesn’t just apply to how you’re managing your finances, but also your financial plan and investments. If your plan is too complicated to understand then it is difficult to execute. That means you risk not making any progress or potentially even losing money. Just like getting started, you will learn as you go, and be able to make improvements along the way. So keep it simple.
How to be Proactive and Take Action
Don’t be “Pennywise and Pound foolish” focusing on the small details and seeking perfection. When it comes down to it, the best version of anything, be it a budget, a savings account, or an investment platform, is the one you commit to using!
Focus on the bigger picture. Try to recognize when you’re getting bogged down by insignificant details. The most important thing is getting started now. Then you can allow yourself to learn and improve over time!
How to Set Financial Priorities
Prioritize one objective at a time or risk losing motivation and possibly giving up entirely. Try to determine what is the most important goal you need to focus on first, whether it is based on financial advice or what is personally most important to you.
Once you set your priorities and move through things more methodically you will be able to make more progress and stay motivated! Once you complete one goal, you can move on to the next one. For example, This is why the debt snowball, while not the best approach mathematically, is the most effective way to pay off debt.
This is where working with a Financial Coach can really help you! A Financial Coach will discuss your personal concerns and help you determine the best course of action.
How to Start Working Together In a Relationship
Take a step back and talk about the big picture. Many times we fail to see we have the same goals. So start to talk about money and your shared goals, working to understand one another. Work to gain understanding about one another and how each of you view money.
Is money more about security or status? Are you a spender or a saver? Our backgrounds play a huge role in how we manage money and we started to learn that at a very young age.
As you seek to understand each other, you can learn how to work together and even help each other conquer these other financial challenges! This is easier said than done, but When you overcome this challenge, you will find that working together as a team makes reaching Financial Freedom and building wealth much easier. When couples prioritize the same goals they stop getting frustrated with each other, and start becoming solution focused.
Focus on Progress Not Perfection
Whether you’ve struggled with any or all of these financial challenges you can relate to – always know that your financial journey is all about progress not perfection! If you’ve felt stuck and like you’re not making the progress you want to see with your finances, these challenges may be getting in your way. But regardless of what financial challenge you face, gaining insights on your habits and behaviors allows you to identify opportunities to improve!
This blog was created based on an episode of the radmoney podcast on the same topic. Catch up on recent episodes of the radmoney finance podcast and make sure you never miss an episode by subscribing on Spotify – Apple or wherever you listen to podcasts!