10 reasons why most people fail to create even modest wealth

Most people don’t achieve financial success. In fact, around 80% of Australians get to age 65 with less than $100,000 in assets outside their family home.

At Initiative, we would consider $500,000 to be the bare minimum starting point for a decent retirement – and almost 90% of people aren’t even achieving that. So while we believe it is simple to achieve financial success, why is it that so many people don’t achieve it?

Let’s take a look at the 10 most common reasons:

  1. Lack of/ too much information – The lack of accessible information used to be the problem, however these days, in the world of Google, the Internet is awash with information. Just Google ‘Wealth Creation Strategies’, for example, and it returns over 1,390,000 results. All of this conflicting information tends to leave people feeling even more confused than ever!

  2. Leaving it too late – The typical situation for most people! We leave school or University and get a job – at that stage, we have 100% disposable income, which is the only time in our life that’s going to happen (although we usually don’t know it at the time). Life is good and long term is usually referred to as next weekend or our next holiday. Retirement is not in the line of sight, and therefore, it’s usually not given a second thought. Eventually, we might partner up, kids come along and so does the mortgage. Our careers take centre stage and all of a sudden it’s 20 to 30 years down the track and we’ve missed out on two or three property or share market booms. It can be so easy to fall into this trap, but it can also be easy to prevent.

  3. Distraction – Because everyday life distracts us – we get busy with our kids, our jobs, and trying to stay healthy – we tend to put off the things that need to be done.

  4. Procrastination – Have you ever used one of these lines, “I’ll get started after that next pay rise”, “…when we get back from our trip”, “…after I’ve paid off the car” or something similar? Most people procrastinate over money matters until just before they are ready to retire, and by then it’s too late. Don’t put yourself in a tough spot – use your time wisely and get into a position to start accumulating wealth as early as possible.

  5. Looking for the ‘magic solution’ – If you’ve ever tried to find the perfect ‘get rich quick’ scheme, you’re not alone! The sooner you realise that getting rich steadily is a lot easier, the better off you’ll be.

  6. Getting caught up in why things won’t work – We all know those people who’ll always tell you why an investment is not right; interest rates are too high, trouble in Asia, an election coming up etc. They always have a reason why not to invest… so they never do.

  7. They don’t believe they can – I strongly believe that the way we feel about money has a massive influence on our wealth. Think of it like a thermostat – for example, they say that most lottery winners are back to where they started after two or three years of winning the lottery, and that’s probably because that’s where their thermostat is set. Whereas Donald Trump on the other hand, lost everything, but within a few years had built it back up because his thermostat was set up high. You don’t have to be over the top about this but you should have a basic belief and expectation that you can and will have a high quality retirement.

  8. They never take action – This is a big one and it should be obvious; if you never take action, you can’t actually achieve anything.

  9. They don’t make it a priority – Even though we know most people say that building wealth is one of their biggest goals, if they’re not spending any time or any money on it, is it really a priority? In this instance, it’s more likely to be just a wish or a hope.

  10. They don’t get help – Lastly, most people don’t get help. All successful businesses and sportspeople have coaches and advisers, without exception. It’s only us amateurs that often want to work out how to do it ourselves. Let’s take Roger Federer for example, one of the world’s greatest ever tennis players, why is it that one of the best tennis players in the world still needs a coach? Quite simply, to make him accountable, to do the things he needs to do, to get the results he wants to achieve.  Similarly in life, an adviser may sometimes tell you things or reinforce what you probably already know, however they’re there to make sure you do what needs to be done.

At Initiative, our role as financial advisers is to make financial success easy for our clients and to ensure they do what needs to be done in order to achieve the results they’re after. 

James Mulhearn CA – Director