Here are a few examples of what that looks like.
Short-term v long-term thinking
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One of the most underrated financial skills is the ability to think long-term. I’m not talking in months or even years, but decades. Here’s the difference in what that sounds like:
Short-term: “I need to get on the property ladder as soon as possible.” Long-term: “I want to buy a property I’m happy to hang onto for a couple of decades.”
Short-term: “What can I invest in that will give me X per cent return in one to two years?” Long-term: “What can I invest in that will still be a quality investment five, 10, 20 years from now?”
Long-term thinking is harder – it takes more patience and delivers less instant gratification. You have to move away from wanting fast results to wanting results that last.
Taking the time to create a streamlined savings system won’t deliver the quick wins that chasing after savings hacks will, but it will deliver bigger, more sustainable results long-term.
Building wealth is a long-term game.Credit: Getty Images
Taking the time to buy a property with your long-term goals in mind won’t satisfy the urgent desire to ‘get on the property ladder’ now, but it will pay off big-time in a few decades.
Fundamentally, wealth is a long-term game. No short-term quick wins will pay off as much as stretching your ability to think long-term in your financial decision-making.
Security v opportunity
Are you acquiring wealth for security or for opportunity? For most, the drive to earn more, save more and invest more is rooted in a desire for security.
This can be a lifelong journey that doesn’t end until you have a fully paid-off house and enough assets to retire. Even then you can still be worried about running out of money.
Instead, what if you started asking, “What are the opportunities that wealth can make available to me?” This takes you on a totally different journey to “How do I create financial security?”
One takes you on a cautious journey where the acquisition of wealth is the end goal. The other opens up possibilities, with wealth being a resource for creating a richer experience of life.
‘Right decision’ v ‘right for me’
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Initially, you might be fixated on making the ‘right’ move. What’s the ‘best’ investment? Should I buy a property or invest in shares? If there’s going to be a market crash, should I sell my investments or ride it out?
The thing is, there isn’t one single correct answer. It’s better to think of there being core principles, and you get to choose how you apply those principles to your life.
You can be financially successful whether you invest in property or shares; whether you buy a property now or rentvest now; whether you invest inside or outside superannuation.
Many choices can be a good choice – so it’s not about trying to determine one universally correct answer but picking the right choice for you.
This requires having the self-awareness to know what’s the right choice for you – and the self-trust to back that choice, even when others appear to be succeeding faster on another path.
Often, we get caught up in trying to improve financial results by taking different actions. Chasing a new strategy, trying a new tool, jumping onto the latest investment fad.
But better financial results come down to one thing: better decision-making. And better decisions start with better thinking. This is a skill you can learn – and when you do, financial growth won’t be something you need to chase. It will be inevitable.
Paridhi Jain is the founder of SkilledSmart, which helps adults learn to manage, save and invest money through financial education courses and classes.
- Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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