Reveals The Easy-To-Understand But Hard-To-Live Idea That Keeps You From Creating Wealth
- Discover the biggest obstacle most people face to achieve financial independence.
- How to know if you're more driven by lifestyle than freedom, and why you should care.
- The 3 paths you'll cross in pursuit of wealth, and which one you must follow to achieve freedom.
Most people want wealth, but few will do what’s necessary to create it.
Why do people want certain things, and never take action to achieve them?
What subconscious thought process causes a disconnect between desire and doing what’s necessary to fulfill the desire?
The reality is almost anyone regularly employed, from ditch-digger to doctor, can achieve financial freedom with relatively minimal effort.
Surprisingly, almost nobody will.
All you have to do is start living by specific, proven financial habits early enough with sufficient consistency. The result will be financial freedom with almost total certainty.
Anyone can do it, yet studies prove fewer than five percent actually reach the goal. It's absolutely amazing.
Why do so few people succeed at creating wealth when so many desire it… and it’s not that hard to do? It makes no sense.
After all, financial freedom can have a powerfully positive impact on the quality of your life. You can live your dreams unencumbered by the shackles of financial constraints. You can eliminate money worries and stop spending so much of your lifetime working to earn it.
Instead, you can travel, play golf, relax, read, or do whatever you most enjoy. Wealth is a very alluring goal.
Yet, while most people dream of financial freedom, very few will turn those dreams into reality by taking the necessary action. Why?
This question has been one of the great mysteries of life for me. It ranks right up there with Black Holes, the Pyramids of Egypt, and “what is electricity”. (Frightening to know what financial coaches think about, isn't it?)
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The Problem People Face When Creating Wealth … Solved
The mystery of why people don’t take action to fulfill their dreams was finally put into perspective when I read a statement from heart surgeon Christian Bernard.
This doctor claimed to have no sympathy for people who lacked the will power or commitment to stop smoking.
At first, this might seem like a heartless statement (pun intended), but you should pay close attention because his observation is very important.
What he observed is that he never had a heart transplant patient who couldn't stop smoking on the spot once they faced surgery. This is a critical and very telling point!
Faced with a massive coronary, surgery, and possible death, people were suddenly able to give up smoking. However, if you tell them about the health benefits of not smoking, you get nothing.
Until the client looked death right in the eye, he would just keep the habit up knowing full well that it was slowly killing him.
Dr. Bernard’s insight on smokers teaches us several lessons about human behavior that explain why most people are so amazingly unsuccessful at creating wealth.
First Principle For Creating Wealth
The first lesson we can learn from Dr. Bernard is that people are generally more motivated to avoid pain than seek pleasure.
“What we pleasure, and rightly so is the absence of all pain.”– Cicero
In the smoking example, the patient would continue smoking because stopping was painful. However, smoking gave immediate pleasure.
The health impact wasn’t as compelling to the smoker as the transient pleasure of the next cigarette, and the immediate pain that would result from not smoking it.
Once the heart surgery became imminent, the health impact was undeniable, painful, and very much in the patient’s face.
At this point, the smoking ends because the dramatic pain of surgery and possible death greatly outweigh the lesser pain of quitting smoking, or the transient pleasure of another cigarette.
People smoke because it gives them pleasure and quitting is painful. They stop smoking only when forced by a more compelling pain: surgery or death. That’s very important to understand.
The exact same issue occurs in creating wealth.
I can lecture on the benefits of saving and investing until I’m blue in the face, and people still won’t do it.
It’s a pleasure goal in the future that requires you to endure minor pains and inconveniences right now to achieve.
“The same refinement which brings us new pleasures exposes us to new pains.”– Edward Bulwer-Lytton
To get someone motivated enough to overcome lethargy, take risk, and confront the fear of change necessary to create wealth, there would need to be an immediate and substantial pain greater than the alternative of doing nothing.
Unfortunately, not building wealth won’t cause you any pain – at least not today.
There’s no motivator like surgery to force you into action. Because of that, few people proactively take action.
Let's face it, the consumer lifestyle (which is antithetical to creating wealth) isn't that bad on a day-to-day basis. You pay your bills, drive an acceptable car, take a vacation, eat good food, and go out once in a while.
Your life is full and so is your tummy. Your pain threshold hasn't been reached or you would do something to solve it.
The rule is simple: you’ll do what it takes to create wealth when the pain of your financial reality exceeds the price you’ll have to pay to do something about it.
You know you should save, invest, and learn about personal finance, but it’s nebulous, and the consequences of putting it off aren’t immediately painful.
Like the smoker who slowly but surely inhales himself to poor health, the typical consumer slowly but surely spends himself into financial emphysema.
The reason is because wealth and financial security has no immediate call-to-action until it’s too late. In fact, not building wealth today gives you more time and money for other activities (pleasure).
Where’s the pain to motivate you into action now? It doesn’t exist… until it’s too late. And that’s the problem.
Second Principle For Creating Wealth
The second lesson we can learn from smokers about human nature is we're more interested in preserving our current comfort than maximizing our future comfort.
We prefer to have our transient pleasure now, even if it implies substantially negative long-term consequences in the future.
For example, every long-term smoker alive is aware of the significant, negative health consequences of their actions. Yet they go right on puffing away because the health consequences are in the future and unknown. The pleasure is present and known.
They're more driven by present, known pleasure than future, unknown pleasure. This is a key point!
The same thing occurs when creating wealth. It requires you to make known, short-term sacrifices (pain) to reach an unknown, long-term goal.
This isn’t an easy sell, and it’s one of the major reasons why fewer than five percent ever retire with financial security.
Below is a sampling of comments I’ve heard reflecting this dilemma:
- “Retirement is so far in the future that it’s like another lifetime. Why bother with all the hassle right now when there are so many other urgent issues competing for my limited time and money? I’ll get around to it someday. There’s plenty of time.”
- “I’m afraid to take on investment risk because it could result in losses. I don’t like to bet my hard earned money on an uncertain outcome. Who knows what will happen? I worry about investing.”
- “I don’t understand investing and don’t like all the math and numbers. Learning about it makes me uncomfortable.”
- “Living on less than I earn so I can save and invest the difference means sacrificing lifestyle today. I really want the new car, new outfit, or swimming pool now. Maybe I’ll begin investing next year.”
- “Learning about investing and personal finance means spending time today for a future benefit tomorrow. I have other things that are bigger emergencies like work, phone calls, television, soccer practice, and making dinner.”
“The world is so constructed, that if you wish to enjoy its pleasures, you must also endure its pains. Whether you like it or not, you cannot have one without the other.”– Swami Brahnmananda
How many of these examples can you relate to? Each illustrates how proactively building your wealth requires you to regularly seek out and tolerate short-term pain and discomfort.
This creates resistance because we’re motivated to seek immediate pleasure now. Pain and discomfort demotivates us.
The reality is life will always provide you with alternatives to building wealth that bring more immediate pleasure.
Similarly, there will always be a more pressing emergency or fire to put out in the short-term than building wealth today.
Wealth is a long-term goal that will never appear important in the short-term – and that’s a problem.
If you want to succeed at creating wealth in your lifetime, then you need a different paradigm than most people typically live under.
You need to find immediate and deeply gratifying pleasure in the act of building wealth. You need to change your viewpoint from sacrifice to satisfaction if you ever want financial freedom.
But how do you do that?
Short-Term Thinking Kills Your Chances Of Creating Wealth
What gets people into trouble with smoking (and wealth building) is short-term thinking. You give greater priority to what’s most immediate rather than what’s most important.
That’s a critical point, so read it twice. Wealth is important, but it’s never urgent.
If you want to create wealth, you must prioritize your life in a different way. You can’t prioritize according to urgency or you’ll never succeed.
Imagine what would happen if you began prioritizing how you spend your time and money according to a long-term perspective.
It would turn every example in this article on its head and reverse the outcome.
In other words, short-term thinking is our automatic mode of operation. We deal with what’s immediate and compelling because it's a survival mechanism hardwired in our DNA.
However, modern society has advanced to the point where this survival mechanism is more harmful than good. Your life could be greatly improved if you learned to balance short-term decisions with a long-term perspective.
If the smoker prioritized the long-term, she would never take another puff. The short-term pleasure from the nicotine would pale in comparison to the long-term health consequences of smoking.
Similarly, if you prioritized your long-term financial health, then your spending, saving, and investing patterns would completely change.
The short-term pleasure of the expensive new outfit or car would pale in comparison to the long-term pleasure of financial freedom.
“Lost wealth may be replaced by industry, lost knowledge by study, lost health by temperance or medicine, but lost time is gone forever.”– Samuel Smiles
The reality is most people make daily decisions based on daily concerns. If you want to create wealth, you need to make daily decisions based on long-term concerns.
This may sound like it requires super-human discipline, but that’s not my experience (or the experience of my coaching clients).
It’s really just a change of perspective that results in changed priorities. It’s easier than it sounds.
Your objective is to get into balance by emphasizing your most important, long-term goals in every daily decision you make.
You don’t need to worry about emphasizing short-term concerns because the outside world will automatically take care of that for you.
Your consumer desires will be well-nurtured by advertisers, and other relationships in your life will all demand their needs be met.
The short-term urgent stuff takes care of itself, so you must take care of the long-term.
Only you can prioritize what’s most important to you by balancing your long-term needs with all the urgent matters of the day. If you don’t do it, then nobody else will.
The unfortunate reality is your long-term goals will never happen unless you proactively make them happen.
The Illusion Of Short-Term Pain
The truth is saving, investing, and learning about personal finance is inconvenient.
It requires you to take time and money away from other activities that provide immediate gratification.
Most of us are busy, and the last thing we need is something more to do. This is a primary obstacle to creating wealth.
The problem is if you don’t overcome this obstacle, then you set yourself up for even greater pain in the long-term.
If your goal is to minimize the total pain in your life, then it’s much easier to confront mole hills of short-term inconvenience than it is to dig out of a mountain of long-term pain.
If you want to retire early and wealthy, you have to stop thinking short-term and start thinking long-term.
Satisfying every short-term need will crowd out the ability to satisfy long-term goals like wealth, health, and fulfillment. This is a critically important concept.
For example, you may prefer to read the latest bestselling novel instead of a book on investment strategy.
There’s nothing wrong with that unless that’s all you read for twenty years. After twenty years, most of the fun reading will be long forgotten, and the price you'll pay for prioritizing entertainment over usefulness will be a lower financial intelligence.
The consequence of low financial intelligence is reduced investment performance, more mistakes, greater losses, and less wealth.
“There is no expedient to which a man will not go to avoid the labor of thinking.”– Thomas A. Edison
Similarly, you may desire a pint of gourmet ice cream more than a little exercise, and there’s nothing wrong with that in the short-term.
However, if you make it a regular habit, then there'll be health consequences to pay over the long-term.
Additionally, there’s nothing wrong with driving a nice car and wearing fancy clothes that fill the closet of your expensive home.
However, after twenty years of prioritizing current lifestyle over wealth, the compound effect is staggering.
Your easy opportunity for creating wealth through long-term compound returns will be wasted, while all those coveted consumer items will be worn out and gone.
The point is that what appears to be the least painful solution in the short-term is usually the most painful alternative when viewed from the perspective of twenty or forty years.
This is a key point! There’s nothing wrong with giving yourself a treat occasionally; the goal here isn’t austerity.
The focus is creating long-term habits that take you toward what’s most important in your life.
Your regular habits are what matters because your health, wealth, and happiness are largely a result of your daily habits.
“Do something every day that you don't want to do; this is the golden rule for acquiring the habit of doing your duty without pain.”– Mark Twain
If you want to solve the problem of short-term thinking, just begin habitually making your decisions from the perspective of twenty or forty years.
It will dramatically change your decision-making process, and it’s at least as valid as the alternative.
After all, what could be more painful than working all your life only to retire in poverty?
That’s the long-term consequence of poor financial habits.
Do you think it’s easier to deal with the relatively minor inconveniences of saving and investing now, so you can comfortably compound those assets into a secure retirement? Or would you prefer a little cushier life now at the expense of desperation and fear as you approach your golden years?
What seems more painful to you?
Long-Term Wealth Is The Least Painful Alternative
What's it going to take to motivate you into action so that you can retire early and wealthy?
Are you going to be the financial equivalent of the cardiac patient who lives for transient, short-term pleasures, only to wake up at fifty or sixty years of age when the long-term consequences are undeniable?
Or are you the rare individual who can see the writing on the wall and proactively balance the long-term consequences with short-term realities by taking action now?
I emphatically encourage you (picture me pounding my fists on the table and screaming at the top of my lungs) not to procrastinate.
Financial freedom will not magically take care of itself no matter how much you trust in the future and believe in the abundance of life.
You must proactively create it. Period. Don’t live in denial.
I’ve been coaching clients on this transition from short-term to long-term thinking for years and the process follows a typical pattern:
- The first 90 days are difficult. You’re fighting all of your old habits and support systems that reinforce your old behavior. An initial period of self-discipline, accountability, and support is required to get you over the hump. (That’s what Step One and Step Two of Seven Steps To Seven Figures helps you with.)
- After the first 90 days, your new support systems and habits are in place and your commitment to the process is ingrained. It becomes much easier, but you’re still subject to potential backsliding.
- After the first year, the rewards of your new behavior become self-evident and reinforce the validity of your new habits. Your bank account is growing and your knowledge about investing and finance is improving, which gives you positive feedback. More importantly, you begin to feel different. You feel stronger, happier, and more fulfilled as you begin living in congruence with what’s most important in your life. You’ve made the transition.
- The final stage is when you can look back on your old way of living with dismay. Just as a non-smoker has difficulty understanding why anyone would voluntarily pollute their system with toxins, the wealth builder can’t understand why anyone would voluntarily choose to set themselves up for long-term financial difficulty. It just doesn’t make sense when the alternative is so easy. Your new patterns are now part of you and the process of building wealth isn’t only enjoyable, but the rewards make it positively addictive.
Ultimately, the whole process of creating wealth changes over time. You transform your focus from the superficial and immediate to the deeper and longer-term.
Where you used to be in love with your actions, you instead learn to love the results of your actions.
In other words, people smoke because they love to smoke. The action of smoking gives them a warm-fuzzy. They don’t love the long-term effect of smoking.
“The victory of success is half won when one gains the habit of setting goals and achieving them. Even the most tedious chore will become endurable as you parade through each day convinced that every task, no matter how menial or boring, brings you closer to fulfilling your dreams.”– Og Mandino
Similarly, people don’t save because they love to not consume. Instead, they save because they love the long-term effect of financial freedom.
Their passion for the long-term effect over the immediate action is what allows them to build wealth. It’s all about what you focus your attention on.
You can either look at short-term actions or long-term effects. Neither is right or wrong, but the difference in results is transformational.
Once you’ve made the change, actions that used to feel inconvenient or painful such as saving, controlling spending, investing, and growing your financial intelligence now become enjoyable.
Your long-term context and the obvious benefits of your regular actions have transformed inconvenience into desire. You no longer require discipline because you’re merely doing what you want.
In the end, what you learn from the process is that pleasure, like beauty, is in the eye of the beholder. It all depends on your frame of reference.
The key is to choose a frame of reference that best serves you. Financial coaching and the Seven Steps To Seven Figures courses can help you make that change.
You Must Make One Of Three Choices
In summary, there are three paths you can choose from:
- No action. You do nothing now and you’ll do nothing later because what looked difficult now will become overwhelming later. You never prioritize wealth and financial security because you don’t take self-responsibility. The result is you rely on Social Security, family, charity, and local social services for your subsistence in retirement. You become dependent rather than independent.
- Long-term pain. You procrastinate on building wealth by prioritizing short-term needs until you reach your pain threshold in your later years. By then, the alternatives available to create wealth are limited because compounding your way to wealth requires time, which is now gone. Leverage and/or extreme austerity become the primary paths to reach your goal. You may still achieve financial security, but the actions required will be more drastic, the risk will be higher, and the outcome less certain.
- Short-term inconvenience for long-term freedom. You start building wealth today even though it’s a hassle at first. Over time, you notice fulfillment and satisfaction from honoring what’s important in your life. As your wealth grows, you find enjoyment in continuing the habits that are in alignment with your deeper values and commitments. You look forward to your future with confidence and security because you acted with self-responsibility by creating wealth and independence.
Every day in every way you’re making one of these choices whether you consciously know it or not. Every action and decision either moves you closer to wealth or farther away.
Choosing one of the life scenarios above isn’t optional. One of them is already your reality.
“Good habits result from resisting temptation.”– Ancient Proverb
When you live choices one and two, you’re violating the wealth creating principles discussed earlier. You’re more motivated by avoiding short-term pain than seeking long-term gain.
You’re also more motivated by transient, immediate pleasure than future, unknown pleasure. You haven’t equated how small daily actions cause long-term results.
You’re prioritizing what’s immediate over what is important. You need steps one and two of Seven Steps To Seven Figures.
If you aren’t sure which choice you’re heading toward right now, then just look at your financial results over the last three to five years. They’ll show you with absolute certainty which choice you’re currently living. Results never lie.
But your past is only history. It merely points the direction of your future by showing the results of your current habits.
You can choose to change those habits right now, thus creating a new future. You’re responsible. You can change.
“Men's natures are alike; it is their habits that carry them far apart.”– Confucius
You don’t get lung cancer in one week and you don’t achieve wealth overnight. Cause and effect are linked by habits repeated over long periods of time.
You don’t have to do anything extraordinary to quit smoking or build wealth. You just have to do ordinary things consistently and habitually well.
It requires persistence over time and that’s why it’s hard to live even though it’s easy to understand. It defies the basic human desire for immediate gratification.
It’s why so few people achieve wealth even though it’s relatively easy to do. It requires discipline and a different way of thinking.
The choice is yours. You can choose daily habits that take you toward your long-term goals, or you can choose daily habits that provide transient gratification.
You can pursue long-term pleasure, or you can choose to avoid short-term pain.
Which is most important to you? What are you going to do about it?
The choice is yours.
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Maybe I am the odd duck but I’m retired early and my retirement is well over funded. But I didn’t aggressively save due to a future goal I just had a lot left over after I bought everything I wanted. I still buy used cars with cash though I could buy almost any new car made. It felt and still feels wasteful to buy things I didn’t need or to buy something highly priced when there were lower priced alternatives. I never felt any sacrifice, my wife and I felt blessed and still do.
Yep, those are the words reflecting the values of a true saver and your results reflect that.
What an awesome article! I wish I could share with every young person I know (or maybe even every person I know)! I’m glad I had someone tell me to save when I was younger. I don’t feel I’ve sacrificed a lot and should be able to retire early without any issues.
Severino Jose Arguelles IV
Such straightforward wisdom I have never seen in any material. Truly, wealth management depends much on core principles involving pleasure and pain. Thank you for this article. I have just shared it.
Boy, i’ve been reading about financial independence and been on a journey myself and this is bar none, one of the best articles I’ve read on the matter.