Top 10 mistakes you must avoid to become rich
Financial planning is important to attain your financial goals, It's important for your present and a better future. In fact, if you want to become rich, you must start your financial planning as soon as possible - the younger you are when you start, the better your chances of acquiring substantial wealth.
Financial planning is important to attain your financial goals, It's important for your present and a better future. In fact, if you want to become rich, you must start your financial planning as soon as possible - the younger you are when you start, the better your chances of acquiring substantial wealth. Also for all your financial necessities, just planning is not sufficient, in fact, you require the best financial planning. That means eschewing mistakes. For instance, you may believe that your financial plan is ready, but then what about Emergency funds? Did you create it? Perhaps not. Significantly, we all do financial planning but forget to keep important things in our minds and end up making big mistakes that costs us a lot of money. So, here we present mistakes that you should avoid.
Mistake 1: Not Making a Budget
We should always make a budget. We need to differentiate our expenses from savings, Most of the time we are focused on spending but not on saving, which is wrong. At first, we need to learn how to save then try to spend it accordingly. For that, we should have this habit of making a monthly budget to balance our expenditure and savings and we also need to learn where to invest for more savings.
Mistake 2: Not Creating an Emergency Fund
Along with Expenditures and Savings, Emergency funds are important too to deal with accidents, diseases etc. In case we did not create an Emergency fund, the shortage of money forces us to ask for money from relatives or take loans from banks. So, if you don't want to be in a debt trap, make sure you have emergency fund.
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Mistake 3. Not having Insurance
At the time of crisis, Term and Health insurances play a crucial role in our lives. The insurances cover of 10 percent of your salary will be beneficial at the time of emergency and will be helpful for future generations too. Health insurance will help you to come out from the burden of medical expenses.
Mistake 4. Returns not beating inflation
Investment doesn't mean just to keep money in your bank accounts. When your returns will be able to beat Inflation, that's when we can say its an actually good investment. Mutual fund is the better option for this.
Mistake 5: Not setting financial goals
You need to set a goal before doing any kind of investment. The bigger the goal, the bigger returns you can expect.
Mistake 6: Not choosing right asset class
You need to choose right Mutual Fund plan or Asset Class. After deciding your aim, You need to choose investment tool. Investment without planning will be harmful as your investment will not give you adequate returns. Take decision according to risk and time period and understand the instrument before investment.
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Mistake 7: Not reviewing your investment
Sometimes people invest without reviewing their plan which can give them less returns. It's important to review your investment plan every 6 months or 1 year. If required, you can make changes in your investment plan.
Mistake 8. Piling on debt
Taking unnecessary loans for smaller things can spoil your investment plan. It can become a reason for unnecessary debts. For that, keep track of your loans and take it only when it is absolutely necessary.
Mistake 9: Ignoring tax management
Tax management is important to increase your revenue. It should be done according to the right time. Through tax planning, you can save taxes by increasing your investment and thereby save a lot of money.
Mistake 10: Not preparing a Will
The final step of investment planning is that every investor should prepare a Will otherwise it will create problems resulting in family feuds. This way the family will also have every detail about investments made.