They say that only a fool waits to learn from his own mistakes and that the best way to learn is from the mistakes of others.

As a financial advisor, I interact with people from various walks of life, different ages, different income levels, different careers, different cultures, different religions, different countries, and different perspectives about life.

Even though people are so different, and have different views about money and life, I have come to realize that we are all suffering from the same money problems.

There seems to be an outbreak of a common communicable financial disease that is affecting the majority of us

As a result, I write this article to administer my vaccination to the most common financial problems that are preventing the majority of people from achieving their financial goals. At least from my encounters and experience.

1. Financial Illiteracy

For the average person, who is just getting started with investing, getting your head around the different investment options may prove challenging. 

I’ve seen most of my clients invest in things they don’t understand, or invest in things that don’t actually serve their financial goals, just because they didn’t have someone to help them with their investments.

And the magnitude of this becomes magnified when you have a greater source of income. Your mistakes becomes multiplied, your losses are bigger, and your regrets later on will be even more painful

True to the adage “A fool and his money are soon parted.”

My advice would be, if you are already making a decent income and you have some level of saving, invest in your financial literacy. Have people you trust who are experts in their fields that you can talk to and discuss matters on personal finance and investing.

P.S. You can book a personal consultation with me via this link:

2. Tracking Expenses

If you ask people how much they spend on irregular expenses like food, nine out of ten households won’t have a close approximation, not even an accurate answer. Most can only make estimates which are far away from the truth.

And that’s the problem with high income. Within certain levels, you hardly run out of money and being poor in managing your personal finances can go unnoticed since you have a big chunk of income to work with.

But when your income is small, every coin matters and poor personal finance management is highly felt and punished.

Tracking expenses is one thing that we all know can help us become more accountable and improve our money management, but no one does it.

This is because we do it wrong. The people who fail at tracking expenses use spreadsheets that aren’t easily accessible to them. When you have to sit down for more than two hours to fill out your monthly expenses from your bank statements, that will feel like hell. 

The people I have found to excel at tracking expenses are those who have embraced technology. Nowadays, 90% of our transactions are through mobile money. And we have our phones in our pockets or on our hands all the time. Hence it only makes sense to have an expense tracking app that you can use to track your expenses. A good one that I use that you can check out is called (Money Manager)

It becomes much easier since these apps will even send you daily notifications before you go to bed to remind you to record your transactions.

I know most people dismiss the idea of recording or tracking expenses saying that you should focus more on making money and not knowing where your money went but that never makes sense.

Remember that what gets measured, get’s improved.

Tracking your expenses gives you a second reference to see if you stuck to your budget. It even helps you learn about your relationship with money and study your spending habits.

I’ve not seen someone who is good with money management who doesn’t track their expenses.

But if you are filthy rich and money falls into your bank account like water flows into the oceans, why would you even track your expenses?

3. Lifestyle Creep

As they say, more money does not always mean fewer problems; often, it creates even more problems.

When you increase your income, things change pretty quickly. The house you live in starts looking small and unhealthy to live in, the clothes you wear start looking cheap and unfashionable, the food you eat tastes blunt, your car looks old and creaky, and you think the economy class is unfit for humans when traveling.

That’s the flu that catches everyone who experiences an increase in their income. There will be an urgent desire to improve your lifestyle.

In the psychology of Money, Morgan Housel writes,

“The hardest financial skill is getting the goal post to stop moving. If expectations rise with results, there is no logic in striving for more because you’ll feel the same after putting in extra effort. It gets more dangerous when the taste of having more money, power, and prestige increases ambition faster than satisfaction.

In that case, one step forward pushes the goal post two steps ahead. You feel as if you’re falling behind, and the only way to catch up is to take greater amounts of risk.”

Morgan Housel

Is Lifestyle Creep Bad?

If you listen to most financial gurus, they will tell you that lifestyle creep is terrible, and you should stay away from it.

But remember the main goal in life isn’t to maximize on our wealth but to maximize on your life enjoyment.

Why would you work so hard and amass so much wealth without improving the quality of your life?

The only way you can manage to upgrade your lifestyle and still save enough of your raises is by upgrading your life and upgrading your investments at the same time. This means that if you spend extravagantly on a certain life upgrade, you accompany it with an equal or greater investment in financial assets.

The problem is never really lifestyle creep or improving your life. The problem is that most of us upgrade our lifestyles at the expense of our investments.

When you stop saving to invest and only save for lifestyle upgrades, that’s when improving your lifestyle may hurt your financial goals.

For if yours is to spend all your raises, financial success will always elude you!