Money Mistakes you need to Avoid to Become Rich

By | 17/10/2016

It is the end of the month and I am broke again. Just waiting for my salary. The money just isn’t enough. Every month has a new expense. The spectacles are broken…The bike needs repairs…My laptop was stolen…Somehow expenses rise to meet my income. What can I do differently to change my situation? What money mistakes do I commit that lead to this sorry state of affairs? These questions constantly plague you.

Remember: It’s not your salary that makes you rich, it’s your spending habits – Charles A Jaffe .

Why a financial goal?

“An investor without investment Objectives is like a traveler without a Destination” – Ralph Seger

A financial goal is a target you set for yourself :
• You want to go for a foreign holiday
• You want to buy a new car
• You want your children to study in a good college.
This is only half the financial goal. The next step is how you plan to achieve this.

You have to keep aside money from your paycheck (salary) regularly each month to achieve this goal.Set aside as much of each paycheck as you can for investing. This should be no less than 10 percent of your income.

You have to identify investments which suit your risk profile (How much risk you are willing to bear to achieve these goals).If you are willing to take risks (an aggressive investor) then an investment in equity (stocks and mutual funds) is the way. Investing in equity has a huge risk but may give you a good return.
A return of 20-30% is not uncommon in stocks. This investment would help you reach your financial goal is no time. If the markets crash your losses are huge and it may take several years to reach your goal.
Remember : No risk …No return.If you are a conservative investor you can invest in fixed deposits, PPF or even debt mutual funds. The returns are much lesser than equity but these investments are relatively safe.

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Remember : A slow and steady approach to reach your financial goal rather than not arrive at all.

Avoid Common money Mistakes

Living on debt
Debt : A trap which a man sets and baits himself, then deliberately gets into. A loan is living today on your future income. A loan is given to you (say by a bank) to meet your current needs and expenses and you have to pay it back from the income you would earn in the future with interest.

A home loan is a good loan
You can take a home loan to buy your all important home to fulfill your physical and emotional needs. This is a necessity and as you cannot afford to purchase the home on your current salary, you take a home loan and then repay the bank through the EMI payments.

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