The following article is an initiative of NSE and is intended to create awareness among the readers.
Financial planning can be boring but it is an indispensable part of our lives. Money management is important in order to attain financial goals and become wealthy.Wealth management involves a lot of discipline and patience. Once you bring in discipline in financial management, there’s no looking back as money is bound to grow. Money matters involve seriousness and bad habits have to die to become smart about finances.
There’s no way of making money with callous attitude. To be financial independent and lead a stress-free life, certain money making mistakes have to be avoided right from the beginning.
Here are six common money-making mistakes one should avoid at all costs:
1. Not starting early
As young adults, many people avoid saving and investing in 20s. They are casual about money and put money management on backburner. This is the worst mistake.
Experts say it is beneficial to start saving and investing right from the first job as the money grows and magic of compounding works tremendously.
2. Budgeting
Many people avoid budgeting as it essentially means restricting your expenses. However, a budget is important as it is a report card of your expenditure. By making a budget, you can cut down on unnecessary spending and splurging, thereby leaving you with money that you can invest.
3. Emergency fund
Emergencies can happen any time and having an emergency fund is quite important. Many of us avoid creating such a fund and end up borrowing money, leading to debt.
4. Diversification
Investment is important in order to grow money. Interest rates in saving accounts are dropping, thus making investments crucial. One needs to diversify investments and at least have three to four different instruments.
5. Taxes
Tax planning is yet another an important aspect. Many of us take taxes quite casually and only realise when it’s too late. Look for various tax saving options as you will benefit from them.
6. Want vs Need
One has to understand the clear difference between what you need and want. Stop over-spending on things you don’t need. Write down items you wish to buy and see what you really need. Lifestyle expenses and splurging are one of the factors why people are unable to save.
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