4 Reasons Financial Capital Keeps Eluding You

“Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.”

– Warren Buffett

There are various forms of capital. Here is a post on skill capital. “Money is important!” and you would be right. To assume otherwise will be to deceive the one person you should not — you.

Two principles that govern financial capital

There are some principles overseeing financial capital. One of such is a savings culture. We must have the courage to save out a percentage of our earnings consistently. It is better to save percentages rather than fixed amounts — that way, your savings scale with your income and never feel impossible to maintain.

Second is the principle of investments. We must also learn to invest what we have in worthy ventures — not get-rich-quick schemes — and watch our investments grow. Patient money placed in the right soil always yields a harvest.

Having said this, my focus for this article are the factors that make financial capital elusive to most of us.

Four factors that make financial capital elusive

1. The fear of losing money

The fear of losing our money cripples us and ensures we do not take the investment steps we should have taken. Therefore we remain on the same spot. Fear is a liar. It dresses itself up as caution and wisdom, but in most cases it is simply the enemy of forward movement. You cannot grow what you are afraid to risk.

2. The dangerous pursuit of “financial security”

Closely associated with fear is the strong desire for the oxymoron, “financial security.” We say, or worse still, act this out by our frantic search for jobs that have “financial security.” In our desire to secure the future we shortchange ourselves today, only to realise tomorrow that the security we sought was all but a fantasy. True financial security is not found in a salary — it is built through deliberate choices. The job gives you income; skill and investment give you freedom.

3. Permitting debt to hold you down

Personal debts are bites into future funds. In anticipation for the money yet to come we activate flight mode from present-day needs by asking for soft loans. Debts leave us subject to the person that gave them to us. When you owe, you do not fully own your decisions. Every debt is a chain that links your tomorrow to someone else’s preference today.

4. The waste factor

We activate this in various ways. To some it shows itself as impulsive spending; to others it is an addiction to trendy clothes, phones, or gadgets. If you would take full advantage of the limited financial capital you have access to, you must tend to your wastage. Plug the leaks before you try to fill the tank. The discipline to say no to small, unnecessary expenses today is the same discipline that builds financial strength tomorrow.

Financial capital is not your enemy — your habits are. Tend to the principles. Confront the factors. And watch what happens when discipline finally meets opportunity.