Don’t let your brain sabotage your financial independence

Your biggest investment enemy is yourself.

My mentor always reminds me: You have all of the tools you need to go out and become successful. Basically you have sharp mind. You just have to gather your resources, educate yourself about what you need to do and then walk the path of success.

Mental health is your most important tool on the road to riches. If you are not competent it is very unlikely you are going to get rich. People will take advantage of you. You will put your assets aka cash in some crazy asset that does terrible.

It only take a few bad choices to ruin your financial future. But it is not over till the fat lady sings. I have made plenty of poor investment choices.

When I began investing I saw that oil/gas stocks were paying the highest dividend. Who does not want cash? What I didn’t know is that oil/gas stocks can be risky. There are many companies littered in oil graveyard. And what happened to me? I invested $5,000 in an oil company that went straight into the ground. To be fair, there are oil companies that have been very successful: Conoco Phillips and Exxon are 2 of the biggest names. Anyway, I was devastated.

But that is beginning of my story, not the end. That experience served as a learning experience. It propelled me to do my research before Today, I am well on my way to financial independence, because I educated myself. I would never take back that experience, because it humbled me. You will never know everything.

Nothing happens in a vacuum. While I was making the terrible choice to invest in that oil stock, I also made the choice to invest in this little company called Facebook. I thought to myself: I use this company, so why not invest in it. And I was reward for it.

That was in the past. I am smarter and wiser now. If you do not educate yourself no one is going to do it for you. Today, I do not take as many chances with my money. I have automated my money as much as possible. So I do not let my brain sabotage my success.

I do go chasing rabbit hole investments. Screw Bitcoin, crypto etc. During your lifetime there will be so many new and exciting investments that you can be a part of. But chasing the latest and greatest is not the way to get rich.

You need a plan. When you paid your paycheck or a customer pays you, that money should automatically go into various accounts and investments that are already set up and working for you. You should not even think about it or have to life a finger.

We live in the iPhone App Store world. There are so many ways to save, there is no excuse.

All of this needs to happen without you having to think about it or lift a finger. That way you are not tempted to “tinker” with it.

You want it to stay and grow over time. If you are in and out of the market or investments, you are losing valuable time that is needed for the investments to grow.

Here are some mental risks to avoid on your financial independence journey:

  • Trading to frequently – It is so tempting to buy and sell stocks based on all kinds of various ideas. Some gives you a “hot” stock tip. People are talking about how the market is going to potentially crash. You people getting rich from Tesla stock.

    These things drive you to buy and sell. It can be exciting and a rush. And you don’t want to get left behind. But that is exactly what happens. You are NOT Warren Buffet. You cannot time the market. And you should not try.
  • High risk investments – The financial world makes Billions introducing new financial products every day trying to get you to invest with them. They offer you the moon and back. If it seems to good to be true. It is! Stick with the tried and true methods.
  • Not taking the leap aka fear – I struggled with this one for a long time. My parents never taught me about investing in the market. So I thought: I don’t know what I am doing and I will lose all of my money if I invest in the market.

    Your money can never work for you if you are sitting on the sidelines. If you leave you money in the bank, the value with slowly erode due to inflation. 20 years of inflation will hurt.

What you should do to make sure you stay accountable and don’t sabotage yourself.

  • Pay yourself first – Make sure you are invested in all of the Retirement accounts available to you: 401k, ROTH IRA, TSP, HSA. Money should be taken out of your check and put into these accounts so you can take advantage of all tax savings possible.
  • Have a system – Make sure your money is automatically going from your employer to your checking into your savings, into your investment account and stocks are automatically being purchased for you. That way do not forget one month or are tempted to use that money or are tempted to change what you are investing in. You must be persistent and stay the course.
  • Have a roadmap – Have money goals you are working toward: buying a house, going on vacation, reaching your FI number. Goals keep us motivated and help us celebrate life’s accomplishments.

The path to wealth is simple. But not easy or fast or sexy.

If you are going to reach the promised land, you need to take care of yourself along the way. Life should be fun. But it will also take sacrifice. It is not always easy watching your savings grow and seeing people living their best life on Instagram. You are going to be tempted to spend your money on lifestyle, vacations, children and cars. But you MUST stay the course.

It is also important that you learn how to spend properly. Are you throwing your money away on things that do not add value to your life. Can you actually spend less, get more and enjoy your life more? If you think consciously about how you are spending you can.

In the end success is worth it and you learn that you do not need all the money and things to be happy.

What are your thoughts? Leave a comment, I love interacting and reading them all.

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