This article will explore some important financial attitudes that have a significant impact on an individual’s financial situation. In particular, we identify the ground for financial success, which must be initiated before starting saving or investment, for instance. The ground for saving and the way to financial freedom is by abandoning and denying ourselves some financial attitudes, and instead, adopt others. 

For instance, in some countries, the average interests offered on savings accounts by the majority of banks are between 0.2 and four percent, while some borrowing banks charge more than 20 percent on credit cards. In the first place, avoiding or paying off credit loans with a 20 percent charge would have a greater impact on individual financial well-being than by opening a savings account  that generates a 0.2 or four percent interest rate. 

In principle, attitudes refer to a personal feelings, opinions, and the general approach towards an object. Attitudes are often influenced by situational and circumstantial factors, and hence they are believed to be less stable than personality. One of these attitudes is financial attitude. To describe individual differences in the motivation for saving and spending income, four financial attitudes can be identified. 

Firstly, liquidity may be perceived as a security blanket, leading to hoarding and compulsive saving behaviors. Secondly, liquidity may represent power, status, and control, where it leads to social recognition and acceptance as a result of purchasing status symbols. Thirdly, liquidity can be associated with the expression of love or generosity, including the buying and the selling of emotional closeness and affection. Finally, more importantly, liquidity may mean autonomy or freedom that allows people to escape from their daily routines and circumventing life’s dullest obligations. 

For most individuals who do not have sustainable income, the most important step on the way to achieving financial freedom is to first get a constant income, for example, by getting a job. The typical individual benefits of being employee include salary, occupational health care, lunch benefit, support to leisure activities, parental leave, pension benefits, discounts on banking and insurance services, and supplementary insurance covering occupational accidents and occupational diseases. These benefits all help to improve well-being, and thus lead to the accumulation of wealth. After getting a sustainable income, an individual can then create a financial plan, for instance, a saving plan, for future investments.

Before getting into the details of how to invest and accumulate wealth, some may ask, ‘Why is accumulating wealth important?’ and ‘Why we must achieve financial freedom?’ There are many reasons why individuals strive to improve themselves financially, and every individual must have his or her own reasons. However, for most individuals, the motives to accumulate wealth are that they want to achieve financial independence and live debt-free, or they can easily face unforeseen expenses. Some may want to buy a home, prepare for potential medical emergencies, plan for retirement, build a college fund for children, live worry free, or others may want to save their income for investment. 

All these reasons are considered to be elements of freedom. Because individuals cannot be free when living under debts, worry about their retirement or the future of their children, by accumulating wealth, this does not mean working for somebody for your entire life or being completely dependent on a monthly salary to sustain current lifestyle. With enough savings, individuals can take major life decisions, such as changing jobs, starting their own business, or even retiring early, without worrying about major decisions. 

However, it’s not enough to just reducing expenses to save from the salary. It’s very important that individuals must grow their income in the best possible way, which is through saving as much of their salary as they can, then invest. For instance, investing in real estate, bonds, stocks, or building a business are all good ways to generate profits and grow by getting higher returns. And most importantly, by investing in long-term plans, policies, and schemes, a long-term individual can beat the rising costs of inflation effortlessly. 

However, creating a monthly saving plan and investing must start after reducing down on unnecessary expenses. Avoiding unnecessary spending is also considered the most effective way of saving money while putting aside an additional interest income on salary.

For some, the secret to investing and becoming wealthier is not about how much an individual earns, but rather about what savings allow an individual to achieve. However, on the rich side of the equation, examples are likely to be found in hedge fund managers. They generate a ton of liquidity, but they may also be highly leveraged, meaning that much of their financial assets on paper may come from investing borrowed capital. Lack of control over their own financial decision making is a key indicator that they’re not, in fact, wealthy, but rich.

However, what is the definition of wealth? As we mentioned before, wealth is more than liquidity. In fact, wealth means different things to different people, whether it be physical, emotional, or financial. However, financial wealth can be defined as having an abundance of valuable assets, resources, or valuable material possessions. The true meaning of financial wealth for some is the freedom to decide a best option for them and their family. Ensuring financial security or achieving financial wealth will make it easier to decide what is best for them and their family.

Let us get into the few details of financial behavior that not only prevent some from accumulating wealth but also what many consider to be the reason that keeps most individuals in a state of poverty, whether they are generating a high income or not. Before exploring these reasons, many believe that every individual has the same opportunity to improve his or her wealth and even become wealthy, considering that some may face greater obstacles than others. Though this may be true, the most important truth is the fact that the opportunity to achieve financial freedom exists for anyone.

There are evident to suggest that the reason behind some people to be a wealthier, and others are not, mostly for their lifestyle and mindset. Some people spend their lives lamenting the situation in which they were born, while others strive to change it, and that differentiates between the individuals as well. And we often say that some still believe that they can become wealthy easily, considering that everything depends on luck in life. Automatically, they lack investment initiatives to improve their lives financially as they feel that one day their luck may change and the time will come for them to be wealthy.

However, the reality is that becoming wealthy or achieving financial freedom is more a matter of habits and efforts than luck, and there are negative finance  habits that prevent human beings from achieving financial freedom.

 

To learn more about financial habits and investments, you can purchase THE FIRST INVESTOR book and receive a discount by clicking on The First Investor.