Financial management

Why we’re not rich yet

- October 24, 2014 2 MIN READ

This article is going to explore the reasons and patterns behind our empty pockets.

Most of us are not where we want to be financially, and the dream of hitting the millionaire jackpot seems unattainable. The great news is that we can learn to live comfortably if we are ready to own up to the actual reasons why we’re not rich yet, and decide to do something about it.

No plan

The old maxim “failing to plan is planning to fail” has been proven to be true over and over again. We wouldn’t build a house without a plan so how can we build a life without a plan?

Is the job of building a financial plan too overwhelming? It needn’t be. Choose to work with a professional financial planner, or start small and kick it off yourself. A good plan can be fine-tuned to changing circumstances, aspirations and dreams. Adjusting your plan is smart, but abandoning it is no different to never having one.

Start with a set of objectives or goals, prioritise and add a realistic timeline.

Complain rather than commit

There are plenty of very good excuses that our family and friends will happily accept and sympathise with. After all, they’re probably using the same ones, so sympathising with ours validates their own. Break this link. Let’s admit to ourselves that these are just excuses and stop making them. 

Good habits are hard to get into, and bad habits are easy to get into. If we habitually do those things that serve our plan, we’ll displace those habits that keep us from achieving our objectives and realising our dreams. We’ve now moved from planning to action.

Want more articles like this? Check out the financial management section.

No emergency piggy bank

No matter how good our plan, the world has an annoying way of throwing up unexpected obstacles. A job loss, an accident, unplanned car repairs or a medical emergency all can have an impact on both our income and expenses.

Let’s start by ensuring we have a financial safety net of a substantial cash reserve that, while should be earning interest, is immediately accessible to cover any emergencies. A rule of thumb is six months’ worth of earnings. That’s hard to accrue, but no one promised getting rich was easy. A regular deduction from our earnings or jobs into an investment account will condition us to a reduced income.

Living for today in spite of tomorrow

If we can’t afford it now, we will be less able to afford it once we’ve paid the bill and the interest on the interest.

The future is a long way off, and our wants are today. The utopian mindset of spending one dollar to win the million-dollar lottery isn’t the best way to kill two birds with one stone. Some of our needs – food, shelter, energy, education – also demand immediate attention. Luckily, most of these are easy to quantify and to include in our plan. The rest can be put into the post-wealthy part of the plan.

Following our plan will bring us the wealth we desire, and failing to plan will, well, leave our life to a lottery.

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  • Andrew Caska

    Caska IP Patent Attorneys

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