- Date : 14/12/2021
- Read: 4 mins
Are you aspiring to be financially free? Here are 7 practices that could be holding you back.
Financial freedom is the dream of all – but the reality of a few. It’s alarming how so many people fail to reach financial freedom because of some careless habits and wrong notions that impede their financial growth, and which they may not even be aware of.
Let’s list down some common causes that lead to a lack of financial freedom, from wrong investment moves to overspending.
1. Taking financial advice from the unqualified
While a friend or a relative may seem to know all about money, they may lack the right financial know-how to guide you accordingly. Whether it’s advice on what investment vehicles to leverage or how to plan for your future, it’s best to seek such help from experts to avoid losing money on trial and error.
2. Spending before saving
The thumb rule of saving is that it must precede expenses. Once you budget monthly expenses and have a sizeable amount in hand, you should, first of all, extract your savings and park it aside before spending on leisure or other non-priority expenses.While it’s easy to get carried away and splurge, it’s essential to keep a set amount for your savings and stick to it each month consistently. Over time, you can decide to increase your savings and track these annually.
3. Relying solely on savings
All investment opportunities start with having enough savings. While savings are important, investing them to enhance their value and build more wealth is critical, especially if you want to achieve financial freedom early in life. Building a strong investment portfolio during the initial earning stages draws better returns through the power of compounding. Start early and keep investing even after you reach financial freedom.
4. Lack of awareness about investments
As we’ve already established, investments are key to building a financially secure future. But then again, it’s a risky business. Should you stay safe and opt for mutual funds, or take the risk and play the equity field aggressively? Understanding how investments work, the pros and cons of each option, and choosing the right portfolio suiting your current financial standing and future goals, is a huge leap towards greater wealth creation.
5. Having expensive habits
Adopting a frugal lifestyle can help you save a lot of money. The biggest hurdle towards financial freedom, which especially millennials face, is not being mindful of their spending habits. Expensive vices – whether it is impulse shopping or gambling or clubbing on weekends – can significantly impact the amount you end up saving.A wise person once said - the goal is to be rich, not look rich. Think about how much money you could save without having to spend on expensive brands.
6. Not expanding your revenue streams
One common thing among millionaires is that they understand the importance of diversifying inflow of revenue. Whether it’s investing in avenues that promise a regular income or working at multiple jobs, having an additional revenue stream helps you earn more, which you can plough back into your savings and investment plans, and eventually attain financial freedom.Remember, being content may seem comfortable, but stepping out is what will bring you closer to your goal. Having a ‘side hustle’ is imperative when it comes to creating and growing your wealth.
7. Caring too much what other people think
Whether it is taking their financial advice or giving in to peer pressure and spending more, the more you care about what people think of you and your financial status, the more you may end up making decisions that negatively impact your savings and investment plans. It’s best to know your priorities and work accordingly, even if it means cutting corners or offending a few people.
Financial freedom does come with multiple sacrifices and taking informed decisions. If you’re working towards achieving financial freedom, especially when you are in your early-to-mid thirties, be sure to take these points into consideration so you can achieve your goals that much sooner! You can also take a look at these 8 Reasons that are causing millennial women to struggle with their personal finances.