The best way for most people to reach financial independence over the course of their lives is to be employed at all times. You can't wait around for the economy to improve. You need to adjust if your particular skills aren't needed in today's market. Being able to adapt is one of the biggest factors in your measurement of your human capital, because it means you can meet adversity with the type of thinking needed to survive.
A factory worker can lament the loss of jobs with outsourcing or computerization and blame the government for unfavorable policies or blame corporations for looking to save money. He will do much better for himself if he accepts the fact that the skills he has do not meet the needs of an economy that relies more on technology and has more access to distant locations where a family's financial needs are not as cumbersome as they are in this country.
The quicker he concludes that he needs to adapt to a changing world, the sooner he can take responsibility for his future and maintain a healthy income that grows into wealth.
I keep getting charged fees by my bank, and it's due to their policies.
Bank of America customers know that their financial institution is always willing to do whatever it can to collect as much income from fees as possible.
A recent lawsuit
has resulted in the bank giving partial refunds to current and former customers who were charged several overdraft fees in one day.
While the bank's consumer-unfriendly, sneaky policy that maximized its profit by ensuring overdrawn customers would pay the maximum fee possible, it doesn't change the fact that only people who were overdrawing their accounts or who were dangerously close to doing so on a frequent basis were the customers who paid the most. Those
or worse were most vulnerable. You can blame the bank for the policy that ordered debits from largest to smallest, but this is an approach that will limit your ability to succeed with your finances. Read the policies,
choose a better bank
, and save your money so your balance isn't dangerously close to zero.
I'm in debt because of a financial emergency.
Being a pedestrian being struck by a moving vehicle is one of the worst things that can happen to someone. Hospital bills for major accidents are one of the biggest causes of financial devastation. Losing a job, helping a family member with her own emergency, and going through a natural disaster like Hurricane Katrina or Superstorm Sandy are other reasons - besides compulsive shopping - that people fall into debt without a mechanism in place to get out.
While emergencies can never be fully avoided, you can be prepared. You can avoid risk by living somewhere that is not prone to weather-based devastation, though that doesn't limit the possibility completely. You need to have the
appropriate level of insurance
. That includes automobile, life, health, hurricane, earthquake, flood, disability, long-term care - and enough to cover whatever you might not be able to pay for yourself. You need to have
an emergency fund of the appropriate size
. With these tools, you can face financial emergencies without jeopardizing your future.
I lost money on my investment.
This is one of those cases where people love to look for external reasons for their failure rather their own lack of skill or ability in picking an investment. I've seen people absolutely convinced that no real estate purchase is a bad idea significantly overpay for their house and then need to take a significant loss when they needed to sell in the middle of the recession. I've purchased stocks I thought would perform well in the short-term, only to find they did not provide the returns I was hoping for.
The list of possible blame recipients is long when it comes to investments gone bad, and here are just a few:
- The market crashed, so it's just a matter of bad timing or bad luck.
- The company's marketing - or even lying - persuaded me to make a bad investment.
- I was fooled by Bernie Madoff or some other swindler, who promised great returns amid a tough economy.
- The company's CEO was involved in a scandal that destroyed the stock's value.
External forces certainly play a role, but every one of these reasons can easily be turned around to show the investor was at fault. You can't time the market, so invest for the long-term or put your money in an investment or savings vehicle much less volatile. Don't trust marketing. If something sounds too good to be true, it probably is. Ask questions if you have concerns. Diversify so you're not significantly affected by the actions of one person or one company.