A Personal Finance Blog for Malaysian: 7 Obstacles to Financial Success

Friday, October 7, 2011

7 Obstacles to Financial Success

The Quiet Millionaire by Brett Wilder.

Wilder’s book isn’t flashy or gimmicky — it’s just filled with lots of solid, practical advice for those who want to grow their wealth.

According to Wilder, the seven obstacles to financial success are:
  • Lack of discipline. Without discipline, it’s difficult to build wealth. In fact, it’s impossible to get rich — slowly or otherwise — if you spend more than you earn. The math just doesn’t work. Wilder also warns against compulsive spending, and he urges readers to track where their money is going.
  • Materialism. Things will not enrich your life. It’s so very easy to find yourself “keeping up with the Joneses,” succumbing to lifestyle inflation. But materialism breeds discontent. Instead, Wilder says, focus on intellectual and spiritual pursuits to obtain fulfillment.
  • Debt. Not all debt is bad, of course. A reasonable mortgage on a sensible home is fine. But consumer debt — or a bad mortgage on a big house — is an enemy to financial success. In fact, bad debt may be the biggest enemy to financial success.
  • Taxes. It’s our responsibility to pay the taxes we owe, but we’re under no obligation to pay more than that. “It is not unpatriotic to reduce paying your taxes,” Wilder writes. We should instead actively work to keep our tax burden as low as possible.
  • Inflation. Inflation is wealth’s silent enemy. It will not destroy you all at once. But it’s always there, nibbling at the corners of your life, consuming a little cash every year. It’s impossible to keep inflation completely at bay, but you can learn to mitigate its effects.
  • Investment mistakes. As many investors have learned recently, poorly structured investment portfolios can be a killer. This obstacle is overcome through education, through an understanding of diversification and asset allocation, by taking the emotion out of investing.
  • Emergencies. The final barrier to financial success is the unexpected: unemployment, death, illness, and legal complications. Without a plan for emergencies, you leave yourself at the mercy of the fickle fates. Carry adequate insurance and maintain an emergency fund!

Comments from AskChong:
I can't disagree any of the 7 obstacles listed above, if you have any key obstacles not listed above, what is yours?

1 comment:

  1. Inflation, inflation, ... out of our control. That why we need passive income to overcome all this problem.