Bad habits die hard and if we speak from the financial point of view, a poor financial mindset leads to impulsive spending or improper planning that lead to draining away your wealth, on the other hand good financial habits help in accumulating a large corpus over time.
Let us take you through Five Poor Financial Mindsets that most of us possess however must rectify ASAP:
1. Procrastinating Investments
The sooner you start saving and investing, the larger cache you will collect over time owing to compound interest factor. We all know this very well but fail when it comes to implementation. People who haven’t developed the habit of savings, keep on postponing the savings for the purpose of investment on the pretext of various expenses that pop out of the blues and investment plans are procrastinated to next month, next appraisal, next bonus and so on.
2. No Savings Agenda
In case you’re one of those who spend all their hard earned salaries/incomes without keeping some part aside every month for not just the rainy days but for savings too, or you are the one over spending via credit cards - which is even worse, then you’re in for a lot of trouble. You need to improve on the latter habit otherwise you will keep paying off your credit card debts and will be unable to save for the later years. For the ones that fall in the former bracket, read point number 4.
3. Withdrawals from Savings Account
Don’t worry you are not the only one who withdraws money from the savings account whenever a need arises, in fact that is a primary purpose of saving. However, if you withdraw too often then you must restrain yourself and either invest the money or transfer it to an account that has a high interest rate, so as to create two accounts one to create a heap that you can utilize in your later years and another for the present day emergencies. You can further also invest the amount in SIP Mutual funds after a certain period of time.
4. Investing the Left-Overs
Often people who are keen on saving follow a vague method. They cover their expenses first and then they save or invest whatever is left of their monthly income. However, this is the wrong way to go about your savings. You must already have a list of your regular expenses and a certain fixed percentage in your mind that you must save or invest every month. It is better to start putting aside atleast 20% of your earning and then clinching your expenses from the rest 80%.
5. Retirement is Far-Away
When you start working and are in your early 20s, retirement may seem ages away but time indeed flies. The golden years to save and invest are your Twenties, these savings ensure that you have complete peace of mind and abundance in your silver years. It’s better to think of how you wish to retire when you get your first pay check. Talk to your parents or a financial advisor on how to save and further invest. It will give you perspective and you’ll be able to save from Day 1 of your financial earning.