Challenges to Becoming Wealthy

IMHO, here are some challenges to creating personal wealth:

More Time Needed - Time is one of the major factors in creating wealth. Saving and investing over a long period of time always works. Some people just haven't had the time they need for their plans to work. Some are in the 20s and 30s and some started later in their 40s. However, if they continue with their plans they will become wealthy. Many people are in this category I wish them good fortune on their personal finance journey to success. Remember, for most of us, wealth building is a marathon, not a sprint.

Lack Discipline/Commitment - Many people understand what needs to be done. However, only some are willing to , able to or committed to do it. For example, an activity that is guaranteed to work is to save 10% of one's income. It is guaranteed to work, whether one makes $10,000 or $100,000 per year. Saving only $1 per day can create over $500,000 in 50 years at a 10% return (average yearly return of the stock market since 1926). Imagine what saving 10% of one's income can do.

However, there are many reasons people give for not being able to save 10% of one's income. The reasons include:

Would require too much sacrifice.

Can't afford 10% after all "necessary" expenses.

Too much debt.

Don't make enough money.

We really "need" to drive a new car or live in a more expensive house.

Can't get a higher paying job.

Yes and ..... I submit it's a choice. Decide yes, and one will likely become wealthy. Give in to the "reasons", and one may never become wealthy.

Need a Better Strategy - Having a good plan to build wealth is important. Good plans have a higher probability of success than poor plans. As example of a good plan is to pay oneself first. In my opinion, a poor plan is one a former colleague used - increase one's standard of living by maxing out credit cards, and then make the minimum payment forever. The majority of plans and tactics shared are good ones. However, it is important to know that some plans won't work.

Here is my own personal wealth building strategy which I believe is a good one:-).

Had a Disastrous Event - Even the best plans can be derailed by outside influences. Job loss and health issues can be major negative impacts to wealth building. Even a temporary job loss or temporary illness can significantly reduce one's wealth. I know some people have had this happen to them. Getting back on track is generally a difficult and long task.

We have been fortunate so far and have avoided any disastrous events. While I can't prevent a disastrous event, I make contingency plans in case such an event happens. My contingency plans include an emergency fund of a year's income and comprehensive insurance coverage.

That's my personal assessment of why we're not all wealthy yet. In my opinion, many of the "more time" group will likely succeed and become wealthy someday. Most of other three groups will try valiantly ... and only a few will succeed.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial nor wealth building advice. Please consult a professional advisor.

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