Many a time, we are often bogged down internally by some finance and money related barriers, which often work as impediments to our overall financial progress in the future. Suppose someone asked you why you cannot build a corpus of Rs.1 crore over a period of 10 years. You may actually think of accumulating a couple of lakhs in 2-3 years or maybe a maximum of Rs.10 lakhs in this time period. It all starts with this mental barrier; people do not want to think big.
Here are some barriers that you can definitely do without-
- Spending mindlessly- Mindless spending is actually quite natural for many people these days and most people do not think about how they spend their money. It is sometimes okay in case of items which are not that expensive but when people start purchasing products with borrowed money at high rates of interest (read credit cards), this leads to financial trouble later on.
- Being dependent on debt- Spending with credit cards or taking personal loans for meeting even regular expenses is never a good idea since you pay a high rate of interest which boils down to higher EMIs and huge trouble later on. Debt is considered natural if you are thinking of buying a home. In case of everything else, it is better to put your head down and save for the same.
- Saving without investing- Simply saving money in your bank account without investing it suitably is not the right away to create wealth. Your money should work for you instead of lying idle in a savings bank account which anyway offers paltry returns in terms of interest. You can invest in fixed deposit or other similar instruments for growing your wealth over a few years. Use an online FD calculator to work out your maturity amounts and harness the power of compounding with your Fixed Deposit. Check out the FD interest rates offered by various banks and NBFCs and take a decision accordingly. This will help you grow your corpus to meet future needs.
- Blindly following strategies of other people- There is no one size fits all mentality that can successfully apply here. Financial advice is often taken from friends, colleagues and family members. However, while constructive advice is always welcome, it may not always be the right recipe for your own financial growth.
- Restricting future goals– Most people often allocate future goals based on their current earnings and what they feel they need which basically limits their horizons. You have to first think rationally about future goals and then discover how you can accomplish the same.
- Not having any financial targets- More money gives us the freedom to pursue goals like buying a home or a car or even traveling among others. However, not having a financial goal is a big mistake that many people end up making. One should always have a financial plan to earn more freedom in the future.
- Fearful approach- Adopting an approach based on fear is not the right way to go. One should be cautious instead. Simply basing one’s perspectives through others’ opinions leads to unnecessary investment linked fears which will not do you good. Equity may be a risky investment but you can invest smaller amounts without having to risk everything, for instance.
- Not putting plans on paper- If you have a financial plan or target, the best thing to do is write it down on paper. Keeping it in your head will only lead to you getting muddled up. Saying something is different from writing it down and considering all scenarios accordingly.
- Not prioritizing goals- You should always prioritize varying financial goals in order to allocate savings and investments accordingly. For example, having a contingency fund should ideally be the first priority and you should allocate more of your investments initially for this purpose.
- Procrastinating- This is something that most of us end up doing. Do not put off investing or saving money for tomorrow or next month. Do it today since the earlier you start, the better off you will be in the future.