3 Things You Need to Sacrifice to Improve Your Finances

What have you sacrificed to get to where you are financially? Has it been worth it?

There are many sacrifices you can make to achieve financial independence. But it all starts with knowing what you want to achieve financial freedom from.

You've probably realized that your financial situation has changed and that you need to start spending less, saving and investing more, etc.

Many people have a static view of the world. When they think of their possible paths in life, they only consider the limited paths that are familiar to them.

However, the world is not binomial; it has unlimited possibilities. 

There are infinite possible lifestyle choices between being a teacher and a racing driver. They all involve making some sort of sacrifice.

Read Also: 5 Lifestyle Changes to Make if You Want to Save Money

No Shortcuts

Although there may be no guaranteed way to get rich quickly, there are ‘tricks’ that could help you build your wealth.

For example, taking up side hustles offers you the option to generate multiple streams of income, while automating your finances ensures that your contributions are consistent which then translates to a major boost in your savings.

Even waking up early (something that most billionaires are obsessed with) seems to help.

No matter what you choose to do, though, it seems clear that you may have to make some sacrifices.

This brings us to the next logical question, are there any universal types of sacrifices, a sort of one-size-fits-all approach to sacrificing for financial wellness? Yes, and No.

A copy and paste approach may not be the best, but customizing what could work for you and your level of income, financial responsibilities, and so forth could work.

After combing through countless books on sacrifice and money, I have identified three common things/items that are always present when people share their ‘this is what I had to do to get here’ story.

Let’s take a look at each.

No victory without suffering. No freedom without sacrifice - The Lord of the Rings: The Return of the King

Read Also: Six Sacrifices You Need to Make to Escape Poverty

Comfort Zone

As much as many may like the safety of staying on shore, putting something aside in the bank each month, and watching it earn some kind of interest, at some point, you need to go out to sea.

Most people are content with the interest rate on their savings account because they believe the money is safe and will never lose value.

You were mistaken. Inflation is eating up your savings. Everything around us is becoming more expensive by the year. So, in fact, you are losing money but mentally you are not.

This is where comfort has to be sacrificed and a calculated risk embraced. This is in no way a push for you to drain your savings account and invest in Bitcoin. However, it is a push for you to look into viable investment opportunities.

To combat inflation, you must invest your money in vehicles that allow you to outperform its rate. In other words, you must take more risks and accept volatility as a natural part of the journey.

That entails foregoing what you believe to be safe in order to get higher returns. This means examining how risk-averse you are and finding ways to work around it.

Where you place yourself on the spectrum of risk tolerance is a personal choice, but one that can have a big impact on your net worth.

Here are top signs you may be too risk-averse.

• Your retirement portfolio is growing at a snail’s pace
• Your career is stagnant
• You’re afraid to go back to school
• You wouldn’t move for a job

Someone who is risk-averse has the characteristic or trait of preferring avoiding loss over making a gain.

Predictability isn’t a bad thing but there are times when you just need to take a leap and risk it all for growth. As the wise always say: Nothing ventured, Nothing gained.

Read Also: How to Turn Your Savings into Investments

Time

How you spend your time is what eventually defines you. This means that sacrificing some of your time for personal development could potentially lead to the financial status you crave.

You should sacrifice more of your time in order to earn a higher income. If you are doing the same thing and working the same hours, you may find it difficult to approach your employer and request a raise.

If you want a raise, you will most likely have to work harder or longer hours. The concept also applies if you are a freelancer.

You must specialize in something if you want to attract more clients. In either case, you will need to devote more time to the task.

Ever heard of the 10,000-hour rule?

Popularized by Malcolm Gladwell in his best-selling book (Outliers: The Story of Success), the rule is pretty straightforward forward and it goes like this: It takes 10,000 hours of intensive practice to achieve mastery of complex skills and materials.

Now, this rule has come under a lot of criticism with some saying that one could master their craft in less time by having a more focused approach in practice. e.g by having a trainer to help guide you through the process.

But, the very core of the rule can be argued to be an absolute truth, if you don’t put your time into any venture or craft you are undertaking, the chances of failure are at 100%.

You could start by taking 45 minutes each day and dedicating it to yourself. During those sacred 45 minutes (it could be in the morning), don’t entertain any distractions, just work on yourself. 

For example, I have made it a habit to read and write each day as this is my craft.

It doesn’t matter what line of work you are in, find a way to improve your tradecraft and focus on that for 45 minutes each day.

You can then revisit this article a year from now.

Read Also: 10 Steps to Reach Financial Stability

Wants

Now this is a sensitive sacrifice as we find it difficult to differentiate between wants and needs, but it still needs to be examined

To be clear from the onset, don’t make goals like ‘stop going out with friends’ or going to extremes like cutting off your internet connection, or never getting a haircut.

This sacrifice simply means limiting ourselves to a budget and ensuring that we don’t spend all our income.

Ahh, finesse (ge ge ti)

If I broke na my business (ye ye)

Ama shana e go bright o (ge ge ti)

Folake for the night o (ge ge ti) (yeah)

This is a really nice and popular song that calls for ‘enjoyment’ but let’s leave it at just that. A song. 

Think of it this way, that second line (the most catchy one) can be debunked. If you run broke, it really is your business.

Taking nothing away from the global hit song (which I actually like), you need to be more intentional with your finances if you are to ‘drip in finesse’ later on in life.

You can certainly treat yourself every once in a while, but unnecessary luxuries shouldn’t be a regular part of your spending.

There is no way around it. If your spending habits cannot be controlled, then forget how much you earn. You are going to spend it all anyway.

Complaining about one’s income is a fairly common occurrence. However, it is also true that the majority of people do not actually optimize their spending.

Set aside your desires and concentrate on your needs. Do you actually need a three-bedroom house? Do you need to go shopping every weekend? Do you need a new car? 

Do I need it now? is also a helpful question to ask yourself anytime the urge to splurge kicks in. The key is to start questioning yourself about your spending habits. 

It is equally important to note that cutting down on expenses is just one side of the coin. You also need to look at ways to improve how much money is coming in.

This may mean changing your job or getting a second job. You could also look at your current job and see how you can get more out of it. 

Read Also: 8 Questions You Must Ask About Your Finances Today

WRAPPING UP

You must sacrifice something to get something else. That is arguably one of the most absolute truths in life.

Sacrificing now for a better life later isn't the most glamorous idea. But it's important. 

Keep this in mind the next time you want to splurge on something: You can borrow money to put your kids through college, but you cannot borrow money for retirement, you must have saved those funds yourself over the years.

The message on financial sacrifice is a simple one – those who sacrifice some discretionary joys now and make their money work a bit harder for themselves will be the ones with the cash when it matters most.

You should always remember that knowledge is empowering only if you act on it.

So, what are you sacrificing right now?