8 reasons 95% of people don’t achieve financial success, according to Warren Buffett

When someone is wealthy, we assume they’ve got it all figured out. When someone’s broke, we think they must be doing something wrong. But the truth, as shared by billionaire Warren Buffett, is a little more complicated.

Financial success, it turns out, isn’t just a game of numbers. It’s about mindset, habits, and often unseen factors that make the difference between the haves and the have-nots.

So why don’t more people hit the financial jackpot? According to Buffett, there are eight common roadblocks.

And no, you won’t need a degree in rocket science to understand them. Just a little bit of insight and willingness to change could be your ticket to join the 5% who do make it big.

We’re about to delve into these financial truths, so buckle up. It’s time for an eye-opening journey into the world of money and success.

1) Lack of financial education

Money matters can seem as complicated as rocket science.

But here’s the thing: they’re not. Most of us just didn’t get the education we needed to understand them.

Think about it. You’ve probably spent years studying math, science, and literature. But how many hours have you spent learning about investments, taxes, or retirement plans?

According to Warren Buffett, this is where most people trip up. They don’t know the basics of personal finance, and so they make decisions that feel right, but end up costing them in the long run.

If you want to join the 5% who achieve financial success, you need to understand how money works. And that starts with educating yourself.

It might sound boring, but trust me: there’s nothing boring about seeing your savings grow and knowing you’re on track to a secure future.

2) Fear of taking risks

I’ll admit it, I used to be terrified of taking financial risks.

Every time I thought about investing in stocks or starting a business, I would get this sick feeling in my stomach. What if I lost all my money? What if I failed?

But then, I came across a quote from Warren Buffett: “Risk comes from not knowing what you’re doing.”

And it hit me. The fear wasn’t from the risk itself, but from the uncertainty.

So, I decided to educate myself. I read books, watched videos, and even took a few finance classes. And as my knowledge grew, my fear began to diminish.

Now, I’m not saying you should throw all your money into risky investments. But don’t let fear stop you from exploring opportunities that could lead to financial success.

Remember, every successful investor or entrepreneur has taken risks. It’s part of the journey. And trust me, once you overcome that fear, the journey becomes a whole lot more exciting.

3) Short-term thinking

Did you know that the average holding period for a stock has decreased from around 8 years in the 1960s to only 4 months today?

This shift towards short-termism is a trend that Warren Buffett explicitly warns against.

Investing is not a get-rich-quick scheme. It’s a long-term game that requires patience and persistence.

Impatience leads to hasty decisions, like selling stocks at the first sign of trouble or jumping on the latest investment fad without proper research.

Buffett himself is known for his buy-and-hold strategy, where he invests in companies for the long haul rather than trying to make quick profits.

So next time you’re tempted to make a hasty financial decision, take a step back. Think long term. Your future self will thank you.

4) Not saving enough

This one might seem obvious, but it’s surprising how many people overlook the importance of saving.

Warren Buffett didn’t become a billionaire overnight. He started saving and investing from a very young age, and continued to do so consistently over the years.

The problem is, many people live paycheck to paycheck, spending what they earn without putting much aside for the future.

But here’s a reality check: if you want to achieve financial success, you need to start saving. And not just a little bit here and there, but as much as you can afford.

Even if it means cutting back on non-essential expenses or finding additional income streams, every little bit adds up over time.

Remember, it’s not about how much you earn, but how much you keep. And the more you save, the more you have to invest in your future.

5) Ignoring the power of compound interest

I used to think that saving money was enough. But then, I learnt about compound interest, and it completely changed my perspective.

Compound interest is what happens when the interest on your money earns interest itself. It’s like a snowball rolling down a hill, growing bigger and bigger over time.

Warren Buffett himself has said that his wealth is a product of a lifetime of savings and compound interest.

And I have seen it work in my own life. The earlier I started investing, the more time my money had to grow. It wasn’t about big, risky moves, but small, consistent actions that added up over time.

So, if you’re still thinking that putting money under your mattress is a safe bet, think again. Invest wisely, and let the power of compound interest do its magic. Trust me, your future self will thank you for it.

6) Chasing after money

This might sound surprising, but one of the biggest roadblocks to financial success is actually the relentless pursuit of money.

Warren Buffett’s advice? Don’t just chase after money. Instead, focus on doing what you love and money will follow.

This doesn’t mean you should ignore your finances. But it does mean that a single-minded focus on wealth can lead to poor decisions, stress and ultimately, burnout.

When you’re passionate about what you do, you’re more likely to put in the hard work and dedication it takes to succeed. And success often leads to financial rewards.

So, if you’re stuck in a job or business just for the paycheck, it might be time to reassess. Find what makes you tick, and pursue it with all your heart. The financial success might just be a pleasant side effect.

7) Neglecting to network

You’ve probably heard the saying, “It’s not what you know, but who you know.” And when it comes to financial success, this couldn’t be truer.

Warren Buffett didn’t build his empire alone. He had a network of mentors, partners, and advisors who helped him along the way.

Many people underestimate the power of networking. They think they can do it all on their own.

But the truth is, having a strong network can open up opportunities, provide valuable advice, and even help you during tough times.

So, don’t isolate yourself. Attend events, join online communities, reach out to mentors. Remember, your network is your net worth.

Building a strong network takes time and effort, but the rewards are well worth it. After all, no one achieves success in a vacuum.

8) Not believing in yourself

Here’s the fundamental truth: you can have all the financial knowledge in the world, but if you don’t believe in your ability to achieve success, you never will.

Warren Buffett didn’t become one of the richest men in the world by doubting himself. He believed he could do it, and he did.

Your mindset is a powerful tool. If you think you can’t, you’re right. But if you believe you can, that opens up a world of possibilities.

So, start believing in yourself. Believe in your ability to learn, to grow, and to succeed. Because at the end of the day, you are your own biggest asset.

And only you have the power to turn your financial dreams into reality.

Embracing your financial journey

If you’ve read this far, hopefully you’ll have gathered that financial success isn’t just about having lots of money.

It’s about understanding your relationship with money and making informed decisions that align with your goals and values.

Because achieving financial success isn’t just a destination, it’s a journey. A journey that involves learning, growing, and sometimes, making mistakes.

Warren Buffett didn’t become a billionaire overnight. It took him years of hard work, learning, and even failures to get where he is today.

So, as you embark on your own financial journey, remember: it’s okay to take small steps. It’s okay to make mistakes. What matters is that you keep moving forward, armed with knowledge and guided by your dreams.

Because at the end of the day, your financial success is not defined by the size of your bank account. It’s defined by the choices you make, the lessons you learn, and most importantly, the belief in yourself.

So keep learning, keep growing, and keep believing in yourself. Your financial journey is just beginning.