Is Your Financial Fortress Termite Infested?

So, you are financially very responsible. You always pay yourself first. You live below your means and exercise a frugal lifestyle. Your investments are well researched and planned according to your risk tolerance. In other words, you have spent considerable time and effort in planning and building your financial fortress. But have you made sure that unknown to you, termites are not gnawing away and weakening the foundations of your financial fortress? It doesn’t matter if you are a student, a salaried professional or an entrepreneur – if you do not pay attention to these intangibles, they will seriously limit how much money you make in the long run!

Not keeping an eye on the ball
We are in a world full of temptations. Every day a new distraction (opportunity?) will present itself to you. Being surrounded by all these tantalizing options, have you lost sight of the ball?

Let me explain with an example. I have a very good job, a job which many people would die for (OK, that’s a bit of an exaggeration, but it is a very good job). But lately, I have noticed that I have become quite addicted to blogging. After the first few bad days, I do exercise some discipline now, and do not browse except while on a break. But still, it does impact my career. The only asset I have that my employers are interested in, is my brain. They hired my ability to seek out problems and find solutions. While I limit my browsing activities to breaks, in between the breaks, my brain is still wrapped around what I should write about next, or what the title of the post should be. This limits how much of myself I give to my work. While I may not get fired for not having my mind on the job all the time, if I keep going down this path, it will impact my promotions, raise, bonus etc, eventually impacting my bottom line. Oh, if I allow myself to be consumed by blogging, I might get fired too, making an even bigger dent in my financial well-being.

So, if you are a student, ask yourself – are you putting off studying in favor of *insert your guilty pleasure here*? If you are working, are you jeopardizing your $XY,000 job for a $XX whim? Do you have an eye on the ball?

Not staying the course
This is a related problem to the one above. You start on one course – be it getting into a college, or getting a new job, or starting a new venture, etc.And then you look around you and see someone else being successful in something else. For instance, you hear of someone who was very successful by starting his own business and you now want to quit college (or work) and start a business. You have a business, but hear of someone being successful in some other area, and you want to change the course of your business. I could go on citing examples, but you get the point right? The problem with this is, you change your course so often that you will not have a chance to pick up any skill or in-depth knowledge/experience in any one area. Expertise is what makes you money – be it in a salaried job or an entrepreneurship. By flitting between different options, you will shortchange yourself in the long run.

Stagnation and Complacency
This is at the other end of the spectrum from the problem above, and is an equally harmful problem. If you get complacent in your job, and start to stagnate, in this fast-paced world, you will soon be obsolete and be replaced by someone half your age, or willing to work for half your salary. You need to stay the course to generate in-depth expertise, but once you know all that you have to know, you should actively work on finding new aspects of your profile that you can improve. As bad as changing course too often is, staying the course for far too long is a lot worse! Find your balance.

Not Networking
No person is an island. Irrespective of what area you are in, unless you are a super-duper genius, you will not be able to make a lot of progress without connecting with people around you. (Even if you are a super-duper genius, I doubt if you will get far without networking with the right people). So you have a unique talent. Or a great unique idea. Or a fantastic unique product. Unless you market it first, you cannot sell it. People need to know about your talent, to appreciate it. They need to be aware of your idea before they can adopt it. They need to know your product exists, before they can buy it. Did you notice how I stressed on unique above? That’s because if your talent, idea or product is not unique, then you need to contend with competition as well. People not only need to know of your talent, idea or product, you need to convince them that yours is better than the competition’s. It helps if your talent, idea or product is really better than others, but there are a lot of very smart people out there. So unless you have a secret magic formula, go out and make some connections. It’s human nature – provided with two equally good options, I will choose the one that I am more familiar with, or the one that is more popular. This will work in your ability to graduate quickly, or get a paper published, or get a job, or get a promotion, or work on a better project etc. Networking is key. Without networking, your success will be limited, which in turn means you make less money.

Too much modesty
Many of us are reluctant to tout our own horns. It is hard for us to step out of our cubes and declare to the world what we have accomplished. Well, in today’s world, modesty is decidedly not the best policy. It doesn’t matter whether you are a student or working. It doesn’t matter if you work for someone else or yourself. We judge ourselves by what we are capable of, but others judge us by what we have accomplished. To be successful, you need to make your accomplishments known.

Another reason modesty doesn’t work in today’s world is that, not everybody in the world lives by the same principles and ethics as you do. If you have an accomplishment, but fail to claim it, some one else will. Nothing’s worse than coming up with an idea and putting in a lot of effort, while someone else claims the benefits. In the long run, this will put a serious cramp on how much money you take home with you.

Not negotiating your starting salary or pay hike
This one impacts people with salaried jobs. It is disturbing to see many people accept jobs with little or no negotiation for better remuneration! Your starting salary will impact how much money you make in the long run. You bonus, your raise, 401K match by your employer, how much you can invest in the employer stock purchase plan, etc, are all calculated as part of your salary. If you start out with a smaller salary, in the long run, it will cost you a boat load of money!

I am sure there are a lot more intangibles that impact a person’s financial well-being. A lot of termites that can eat away at the foundations of your financial fortress you put in so much effort to build. Watch out for these and pay as much attention to them as you would to the tangibles like your budget or your savings plan!



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4 Comments:

Golbguru said...

I am in tune with your thoughts on modesty. Especially, when dealing with people from a certain country. :) It's not a racist thing...but it's certainly a cultural thing.

I learned it through some bitter experiences...when some major achievements went unnoticed while some other people were getting praised for silly things.

ispf said...

golbguru: You make a good point. While I was growing up, we were raised by rules such as "your accomplishements should speak for themselves", "never boast", "modesty is the best policy" etc. For the cultural setting that I was raised in, that worked really well. But in the workforce, here in the US, it is important to unlearn some of these lessons a little, to get ahead. Maybe not boast all the time, but atleast make sure that the right people know what it is that you have accomplished.

Gaming the Credit System said...

Nice post! It covers a lot of ground... and a lot of stuff that applies to me! I will definitely keep reading your blog.

ispf said...

Gaming the credit system: Thanks, and welcome aboard :)