Seven Deadly Sins of Personal Finance
Wider is one of the best writers. He wrote many books on financial success and how to get it more. Here we describe Wilder’s listing of the seven enemies to financial success (which is my phrase, not his). I like them.
The Seven Enemies of Financial Success
According to Wilder, the seven enemies of financial success are:
- Lack of discipline. Without discipline, it is hard to build wealth. In reality, it is not possible to become rich — slowly or otherwise — should you invest more than you get. The math just doesn’t do the work. Wilder also cautions against compulsive spending, and he urges readers to monitor where their money is going.
- Materialism. Stuff will not enhance your life. It is so very simple to wind up “keeping up with the Joneses”, succumbing to lifestyle inflation. But materialism breeds discontent. Instead, Wilder says, focus on intellectual and spiritual pursuits to acquire fulfillment.
- Debt. Not all debt is bad, of course. A reasonable mortgage on a sensible house is fine. But consumer debt or a lousy mortgage on a big house — is an enemy to monetary achievement. In fact, bad debt might be the biggest enemy for monetary success.
- Taxes. It’s our responsibility to cover the taxes we owe, but we are under no obligation to pay over that. “It isn’t unpatriotic to reduce paying off your taxes,” Wilder writes. We should rather consciously work to maintain our tax burden as low as possible.
- Inflation. Inflation is wealth’s silent enemy. It will not destroy you all at once. But it’s always there, nibbling at the corners of your life, consuming a little cash every year. It is not possible to maintain inflation fully at bay, but you can learn how to mitigate its consequences.
- Investment mistakes. Poorly structured investment portfolios can be a killer. This enemy is fought through education, through an understanding of diversification and asset allocation, by taking the emotion out of investing.
- Emergencies. The final enemy to financial success is the unexpected: unemployment, death, sickness, and legal complications. Without a strategy for emergencies, you leave yourself at the mercy of the fickle fates. Take adequate insurance and keep an emergency fund!
We have fought every one of these enemies at one time or another. I still fight a while from time to time. I feel like I have a good handle on investment mistakes and saving for emergencies, but my tax bill this season was onerous as a result of my own poor planning. And, needless to say, I have always fought with discipline.
The Seven Deadly Sins of Personal Finance
Wilder’s seven enemies to financial success always remind me of Catholicism’s traditional list of seven deadly sins. This catalog of transgressions includes a lengthy, complicated (and interesting) history. Today, the seven deadly sins are considered to be:
- Vanity (or Pride). An inflated belief in your own skills.
- Envy. The desire to possess what others have.
- Gluttony. Consuming more than you need, especially with regards to food and beverage.
- Lust. A passion or yearning for bodily enjoyment.
- Wrath (or Anger). The tendency toward indignation and also the desire for vengeance. Hatred toward other people.
- Greed. The desire for material wealth or gain.
- Sloth. The avoidance of the work. Laziness. Make use of your talents.
What could happen if we combined Wilder’s idea — seven Enemies to financial success — with this list of seven deadly sins? If we were to make a list of seven deadly monetary sins, what would these be? Off the top of my mind, these seem like good candidates:
- Sloth. The avoidance of work. Laziness. A failure to act or make use of your talents. Procrastination. Expecting other people to solve your problems.
- Envy. The desire to have what others have. Comparing yourself to others. Keeping up with the Joneses.
- Gluttony. Consuming more than you want. Succumbing to lifestyle inflation, the infinite desire to have more. Being satisfied with what you currently have. The inability to defer gratification. Impatience.
- Aimlessness. A failure to plan for your future. A lack of purpose or direction. Failing to track your progress can be a kind of aimlessness.
- Improvidence. A lack of prudence or maintenance in managing your resources. Spending mindlessly. Wasting what you presently have. Not taking care of your possessions. Replacing the things you have before they have to be replaced.
- Myopia. Making decisions without considering greater implications. Focusing on small, simple steps that produce no real difference (clipping coupons, possibly) while dismissing the huge things that destroy your financial potential (paying a lot for a home, for instance).
- Ignorance. A lack of financial education. Putting blind Religion in external advisors — or even the information. Failing to perform your own research.
Though this listing is spontaneous, I like it. These do feel like seven barriers that prevent individuals from success with cash. But it is more convincing and it’s possible to produce other (possibly more grievous) sins.
What do you believe? In the event that you were to list the seven deadly sins of personal finance, what do you include? And why? It actually depends on individuals.