Most of us don’t have an income problem.
We have a spending problem.
Which is why even after winning a lottery, most people still end up being poor.
If you don’t want to be like them, then by the end of this article you will know exactly what NOT to do.
Because in this blog we are going to see…
9 Money Mistakes we need to avoid at all costs.
And towards the end, I’ll give you a Bonus Tip so that pandemic or not, you still keep making money.
9 MONEY MISTAKES WE MUST AVOID
Let’s begin.
#9 Having DEBT
Debt is when you spend money that belongs to someone else.
And the longer you don’t give them back their money, the more interest you have to pay them. Sounds silly, right?
Then why borrow money?
Some people do it because they have genuine financial needs.
But some do it because they want to imitate a rich friend, follow an influencer or just need to swipe their credit card to get that high.
Hey credit cards are not the bad guy here.
Using those gives you reward points, lounge access but most importantly they build your credit score that can help you buy a house.
But if not used carefully, credit card debt can put you in a lot of trouble.
MEANWHILE, HERE IS A 2-STEP SOLUTION TO BE DEBT FREE.
- Step 1. Plan to pay off any existing debt.
Make a list. Who all do you have pay? And how much?
There is a 50-30-20 rule about money.
50% of your income for your necessities, 30% for leisure and 20% for savings.
But if you have any debts, I would suggest use your leisure and your savings money to first clear them off.
- Step 2: Create a monthly budget
Make another list and write down how much you earn.
Next to it, write down your monthly expenses.
If your expenses exceed your earnings, then see where you can cut it down.
Please do not plan a Goa trip on your friend’s money, because you should never EVER spend money you don’t have.
But wait… I want to go to Goa. I want more money.
I’ll tell you how you can earn more money when we discuss Mistake #4.
But for now, get rid of all of your debt.
#8 Not to save Retirement Fund
Game of Thrones made 8 seasons about how winter was coming.
But when old age comes, it never leaves.
And nobody makes a TV series about it.
The point is… when you get old, there is no undo button that you can press; no dagger than you can plunge into its heart like Arya Stark and make it all go away.
And if you think your kids are your retirement Fund, then good luck!
What I mean is, it’s exhausting to be an adult.
And isn’t it wrong to expect that our kids will support us financially when most of us didn’t even responsibly vote for a party that can provide employment to the next generation.
So start saving for your retirement right now.
After you take out your necessities, move 15% of whatever is left to your retirement’s savings.
Thanks to the power of compounding, the earlier in life you start doing this, the more you will have when you retire.
And it doesn’t matter if Apple releases a new iPhone, do not touch your retirement fund.
#7 Investing in Real Estate [Personal thought]
Hey… I’m all about Apna ghar, but… if you are not staying in that house, real estate as an investment can be a headache because…
- Maintenance Issues: It is harder to maintain especially if you’ve bought the land in some other state.
- Less Liquidity: You can’t get your money back easily because it takes a year or more to sell it.
- Rental Issues: You can have low rental issue and that is assuming that you will get tenant who will pay their rent on time.
- Property tax: You have to pay for property tax
- Repairs and bear the costs of depreciation as well.
#6 Not Learning about Stock Market
The good news is, us Indians are waking up to the possibilities of making money in the Stock market.
The problem is… we are not doing it right.
Why? Because we keep asking our friends… Ae… which Fund you are putting your SIP? One stop tip… give no?
These days it’s so easy to click a button and buy a company stock.
And so we do it… without even understanding the difference between large-cap…mid-cap. ETF and Index Funds.
Don’t get me wrong… Stock Market is a great place to generate long-term wealth.
But before you click that buy button…please…
- Learn the basics of Stock market and how does it make money
- What is the difference between trading and investment
- How to do fundamental analysis of company
- Technical analysis.
Unless you do these and learn to identify companies yourself, the stocks you buy might be great for your friends but not be best for you.
#5 Not having an Emergency Fund
So you make your monthly budget and stick to it. Good.
But COVID-19 has taught us that anybody can lose their job at any time, no matter how many years they were working in a company for.
And that is when your emergency fund can come to your rescue.
Emergency fund is nothing but 4 to 6 months of your living expenses which includes your rent, food, medicine, Wi-Fi expenses etc. saved in case of an emergency.
So that tomorrow, if your jobs and goals and dreams are torn apart, you have something to hold on to.
#4 Not having a Side Hustle
Most of us either don’t like our jobs or don’t like the money we are making.
The question is, what are we doing about it?
All of us need more money.
And the only way to get more, is to work more.
So get online and find out how you can offer a service, be it as a graphic designer, video editor, content writer, logo designer, website developer, teacher or whatever you like doing that can generate you some side-income.
To give you an example, I am a Software Developer and a Robotic System Architect by profession.
And this… making Youtube videos was my Side Hustle.
I worked on it after office hours, on weekends, even left my job when I had the confidence.
And after 3 years, it makes me more money that my main profession.
It’s not easy, but it’s possible.
#3 Leaning on Family
If you still depend on your parents or your spouse to take care of house budgets, or to lend you money to get you out of debt or even buying companies in the stock market, then chances are, you will never learn how to take care of your money.
And if you don’t know how to take care of money, you’ll always be considered a ‘dependent’.
The good news is, the more financial opinions that exist on a family dining table, the better financial decisions you will make together.
So if you want to maintain a healthy relationship with your family, first start building a healthy relationship with money.
#2 Not securing your loved ones Future.
People in their 20s, 30s or 40s… think that they don’t need an insurance plan.
But if COVID-19 has taught us one thing, it’s that life is unpredictable.
And to be prepared for life… there are 2 kinds of insurances you can get.
- Health Insurance… that’ll handle your medical emergencies.
- Life Insurance … so that your loved ones are taken care of, after you, especially if you are the sole bread owner of the family.
And finally money mistake #1.
#1 Not Investing in Yourself
The only way to make more money, is to invest in… no, not stocks…. Yourself.
Investing in yourself will give you more returns than any company listed in NASDAQ or NIFTY50.
INVESTING IN YOURSELF means investing your time and money to build the skills you need, so that you can do find the work you love.
Let’s assume you want to start a business as a side-hustle.
Then you need to learn how to talk to people, negotiation skills, sales, web development, digital marketing or even How to speak in English fluently.
Do you think your customers will have the patience while you learn these skills on the job? Absolutely not.
They’ll just take their business somewhere else.
So get online and figure out what are the best places to learn what you want to learn.
The more time and money you invest in upskilling yourself, the more ways you will find to make money.
And the more money you can invest in upskilling yourself.
This cycle is what makes people financially stable.
So find clubs to join, online courses to do, books to buy or even credible newspapers to read, instead of following sensational news, watching gaming livestreams for 3 hrs or participating in Twitter wars.
Invest in yourself and start the money cycle now.
#Bonus Tip
COVID-19 is just one among the many adversities that human beings have faced.
But evidence suggests that these are also the times when people have made the most money.
Because chaos brings along with it a lot of problems… and hence, opportunities to solve those problems.
So today’s bonus Tip is this… Be ready for an adversity.
Since the time COVID19 began, there are so many ED-Tech companies that are doing well, Netflix doubled its subscriptions and people who had learnt Digital Marketing are now in demand.
So no matter the financial mistakes you have made until now, the biggest financial mistake you’ll ever make is to let go of an opportunity to solve a problem.
So, upskill yourself, find a problem you’d love to solve, and sooner or later, that will make you money.
1 thought on “Money Mistakes that you must AVOID | How to Save Money in 2020?”
Your earlier years should be a time of learning, but also questioning what you are told and even getting deeper into your own best thoughts and viewpoints. Experience may lead you to discover that issues that seem black and white are actually many shades of grey. With age doesn t necessarily come wisdom and many young people to easily accept what they hear from older generations.