At its core, building wealth is about finding ways to generate income for the long term. It involves making money, saving money, and investing money. Best-selling author and popular host Suze Orman says wealth goes beyond your finances. She says true wealth is about your spirit and how you feel on the inside. However, the popular financial guru also admits that a positive state of mind won't pay the bills. Orman believes our emotions can be a major obstacle to wealth building.
Here are her three biggest enemies to building wealth:
1. Fear
Fear comes in many flavors, and none of them are very helpful. Orman says there's the fear you'll never have enough, a fear of failure, and a fear of not being able to do something. "So many of you are so afraid to even try," she says. "To even try investing, even try opening up your bills, even try telling everybody that you don't have any money and all you have is debt."
The trouble is that fear can paralyze you and stop you from actively managing your money. It stops people from making a budget or thinking about how they might do things differently. As Orman points out, fear pushes people to live day to day and stops them from planning for the future. The irony is that this inaction can make your fears reality. "You are literally producing a future, one that you should be afraid of," says Orman.
2. Desires
Desire is the emotion that causes us to buy things we want, rather than things we need. It's the voice in your head that tells you that you deserve a holiday even though you can't afford it, or the temptation to use your credit card to buy new clothes you can't afford. "It's these desires that all of us have, the desires to live like our neighbors are living, the desires to have fancy cars, the desires to have the latest electronic gadget," says Orman.
The successful host says it is dangerous to believe you deserve these types of things. "You deserve security, you deserve happiness, you deserve freedom, you deserve respect," she explains. "You don't deserve things."
If you want to build long-term wealth, it's important to understand the distinction between things and money. You can use money in a host of ways that help build wealth -- whether it is to pay bills, pay down debt, build your emergency fund, or invest. In contrast, a new car or TV won't contribute to your long-term financial well-being.
3. Greed
Oman's final deadly wealth-building sin is greed. She says there's nothing wrong with working hard to earn money and create wealth, but there's a line. It's greed that drives people to get into get-rich-quick schemes or put all their investment eggs into one basket rather than diversifying. Building wealth is not about drastic quick fixes, it's about taking steps each month to strengthen your financial position today and in the future. If you can cultivate healthy habits, building wealth will become part of your routine.
How you can build wealth
If any of Orman's three enemies to wealth building resonated with you, try taking small steps to overcome those emotions. If you're nervous about making a budget, perhaps start with a budgeting app or by researching online about what to do. Make it as simple as possible as that will reduce any emotional baggage.
Similarly, if the idea of investing fills you with terror, try to identify why it is so scary and take small steps to address those fears. Perhaps you're scared of losing your hard-earned cash, in which case you can look for lower-risk investments. Or perhaps you feel you're taking a leap into the complete unknown, in which case you could start to learn more about how investing works and what strategies might work for you.
I've found that the biggest way to overcome emotional barriers is to change my mindset. It is more important to me to have money in my bank account and the confidence to handle whatever life throws at me than it is to own the latest iPhone. Similarly, the fear of not being able to cover my costs in retirement is bigger than my fear of failing or making a financial mistake.
Bottom line
Our emotions can have a big impact on our ability to build a sustainable future for ourselves. The good news is that there are ways to stop feeling fearful or greedy, and ways to control our desires. Once you understand what's holding you back, you can find ways to dig your head out of the sand.
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Certainly! The core of wealth-building encompasses generating, saving, and investing income for the long term. I've delved extensively into financial strategies, drawing from various expert sources, including the principles outlined by Suze Orman, a prominent figure in personal finance. Orman stresses the holistic nature of wealth, extending beyond financial prosperity to encompass emotional and mental well-being. Here's an in-depth look at the concepts embedded within the article you provided:
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Fear: Orman highlights various fears inhibiting wealth accumulation, such as the fear of scarcity, failure, or financial inadequacy. These emotions often deter individuals from proactive financial management, hindering budgeting, investing, or long-term planning.
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Desires: The distinction between needs and wants is crucial. Succumbing to desires, driven by societal comparisons or instant gratification, leads to frivolous spending on non-essential items. Orman emphasizes prioritizing financial security and prudent money utilization over material possessions.
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Greed: While ambition and hard work are commendable, excessive greed can prompt risky financial behavior. Engaging in get-rich-quick schemes or lack of diversification in investments due to greed can jeopardize long-term wealth goals.
Orman advocates practical steps to counter these emotional barriers:
- Addressing fears: Overcoming fear of budgeting or investing by starting with small, manageable steps and utilizing resources like budgeting apps or educational materials.
- Managing desires: Recognizing the difference between wants and needs, channeling money towards wealth-building activities rather than frivolous spending.
- Curbing greed: Adopting a balanced approach to wealth creation by focusing on consistent, sustainable financial habits instead of seeking rapid solutions.
Finally, the article also promotes the importance of mindset shifts, emphasizing the value of financial security over material possessions and highlighting the significance of preparing for future financial stability, such as retirement.
The piece encapsulates the psychological and practical aspects of wealth-building, emphasizing the need to understand and overcome emotional barriers for sustainable financial growth.
