7 Money Mistakes
Adnan Ul Haq
7 Money Mistakes
Adnan Ul Haq
Wouldn’t it be great if there were a book that told you how to get rich? Well, though there isn’t a book for it, we can still provide you with some valuable suggestions.
Read further to know about the major mistakes that you must avoid to become rich. Stay away from these mistakes, and you will be well on your way to generating wealth.
Keeping Your Money in the Bank
The first mistake that you need to avoid is keeping your money in the bank. The money resting in the bank loses its value over a period of time. As the government prints more currency notes, inflation eats your money like termites without you even noticing it.
So, your money loses its value while resting in the bank with each passing day.
Not Buying Real Assets
Another mistake that you should not commit is not buying a real asset with your money. You don’t invest in buying a property, shop, land, cash flow asset, or a business. Resultantly, your money keeps decreasing as it rests in the bank and loses its value. The rich keep becoming richer while your wealth keeps decreasing.
Not Creating Multiple Streams of Income
Not creating multiple streams of income rather relying on a single source, is one of the biggest mistakes that people commit. So, when you get sick, old, or your career faces a downfall, or you face some sort of an issue in life, this income source shuts down.
Imagine - your only source of income would stop generating money for you. However, you would still have to pay your children’s tuition fee, your house rent, and other liabilities. So, it is very significant to build multiple streams of income.
In this way, you will not have to take loans or depend on anyone if any one of your income sources stops generating money.
You Don’t Generate Passive Income
Passive income is the income that you can generate without working or performing any money-making activity. This income is generated from the assets in which you invested. Passive income becomes a source of generational wealth for you since it benefits your kids well. Your assets will keep generating income for your future generations after you.
Spending on Weddings, Funerals, and Events
A mammoth mistake that is widely observed is spending heaps of money on weddings, funerals, and other such events just for the sake of showing off. Moreover, people spend high amounts of money on luxurious items like cars, watches, etc. as well. Nevertheless, none of these investments are going to reap you any benefits, thus it is a mistake to invest in them.
A wise practice would be to invest in a real asset. Buy a shop that can generate you a rental income each month rather than a car that will require you to spend even more.
Not Budgeting or Planning Your Finances
Another mistake that you do is not budgeting or planning your finances and spending without any preliminary contemplation. You do not record your revenue versus your expenditures, which means neither are you able to increase your income, nor will you ever decrease your expenses.
What will this lead to?
Ultimately, you are the one sitting with empty pockets on the 20 of every month, while some people are also found borrowing money from people and their employers.
Not Saving 40% of Salary
Saving 40% of your salary is vital to spend a stress-free post-retirement life. However, if you don't save 40% of your salary, you will have to work more in the future and your retirement age will shift from 60 to 80. This implies that you will be working all your life to make the ends meet.
If you don't want this to happen, then start saving your 40% salary. This will help you stay relieved post-retirement as you will be assured that you have the finances to survive efficiently.
Not Paying Your Own Self
Another fault of yours is not paying your own self, but the question arises - “How can one pay there own self?” You can do that by paying your future self. Then you would ask how can you pay your future self?
You can pay your future self by generating a passive income and a stable cash flow. This can be done by investing in a real asset that generates you income even when you stop working.
Concludingly, you need to avoid these seven major mistakes if you want to become financially independent. Don’t keep your money in the bank, instead invest it in a real asset that becomes a constant source of cash flow for you.