3 Habits Holding You Back From a Comfortable Retirement - Root Financial

In this article, we’ll be discussing three habits that are holding people back from achieving financial independence and retiring comfortably. 

Watch James Conole discuss the topic, or continue reading below.

Habit #1: Focusing on the Wrong Expenses

Mastering cash flow is crucial to building wealth. However, when people look at their income and expenses, they often focus on the wrong expenses. For example, many financial experts advise individuals to stop buying coffee from Starbucks and make it at home instead. While this advice may save some money, it may not be the best use of their time and resources.

If you buy a cup of coffee for $5 every day, you could save $95 per month by making it at home. However, buying a more expensive home than you can afford can cost you hundreds of dollars more per month for 30 years.

The key is to understand which expenses have a greater impact on your cash flow in the long run. While small daily expenses, like coffee, can add up over time, larger expenses, such as buying a home or car, can have a more significant impact on your finances. Therefore, it is crucial to focus on the big-ticket items that can absorb more of your cash flow.

Habit #2: Neglecting to Invest

The second habit that holds people back from achieving financial independence is neglecting to invest. Many people believe that investing is only for the wealthy or those who have a lot of extra money to spare. However, this couldn’t be further from the truth.

Investing is crucial to building wealth and achieving financial independence. When you invest your money, it has the potential to grow and compound over time. This means that your initial investment can turn into a much larger sum of money in the future, allowing you to reach your financial goals more quickly.

Unfortunately, many people neglect to invest their money. They may think that they don’t have enough money to invest, or they may be intimidated by the stock market and other investment options. However, there are many simple ways to get started with investing, even if you don’t have a lot of money to spare.

For example, you can start by investing in a retirement account, such as a 401(k) or IRA. These accounts allow you to invest your money in a tax-advantaged way, meaning that you can grow your money without having to pay taxes on the gains until you withdraw the money in retirement.

Another simple way to start investing is to open a brokerage account and invest in low-cost index funds or exchange-traded funds (ETFs). These investment vehicles allow you to invest in a diversified portfolio of stocks and bonds without having to pick individual stocks yourself.

The key is to start investing as early as possible and to consistently contribute to your investment accounts over time. Even if you can only afford to invest a small amount of money each month, the power of compounding can help your investment grow over time.

Habit #3: Failing to Plan for the Future

The third habit that holds people back from achieving financial independence is failing to plan for the future. Many people live in the present without thinking about their long-term financial goals. They may be focused on paying their bills and enjoying their current lifestyle without considering how their actions today will impact their financial future.

However, planning for the future is crucial if you want to achieve financial independence. This means setting long-term financial goals, such as saving for retirement or paying off debt, and creating a plan to achieve those goals.

To start, you should create a budget that allows you to live within your means and save money each month. You should also pay off any high-interest debt, such as credit card debt or personal loans, as quickly as possible.

Once you have your budget under control, you can start setting long-term financial goals. This may include saving for a down payment on a home, funding your children’s education, or building up a nest egg for retirement.

To achieve these goals, you’ll need to create a plan that outlines how much money you need to save each month and how you’ll invest that money to help it grow over time. You may also need to make sacrifices in the present, such as cutting back on discretionary spending or taking on a side hustle, to help you achieve your long-term goals.

Achieving financial independence is not easy, but it is possible. By eliminating these three habits from your life, you can set yourself up for success and achieve your long-term financial goals.

First, focus on cutting the right expenses. Instead of worrying about small purchases like coffee, focus on larger expenses like your home, car, and education. By making smart decisions in these areas, you can free up more of your cash flow and use it to achieve your long-term goals.

Second, start investing as early as possible. Even if you don’t have a lot of money to spare, there are many simple ways to get started with investing. By investing your money, you can help it grow

Need help with your retirement?

Work directly with a licensed financial advisor at Root. Book a no-obligation initial call now so we can show you how we’ve helped hundreds of people just like you build a retirement they love.