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Gone are the days in which the best way of hoarding cash is by storing it in your bank account. This is mainly because the returns that you get from saving money in your bank account will always be less than what you can earn from investing your money in FDs, bonds, SIPs, stock market, and mutual funds. For all those who wish to be financially independent, the key is to invest your dollars in the right place.
However, investing your money alone is not enough to be financially independent. You should also keep track of your progress so you can remain invested in the long term. Financial advisors always recommend that people start investing early during their 30s so that they have enough time to measure their success and learn financial lessons. Here are few tips which can let you invest more, spend less, and save more.
Don’t fall into the trap of collecting quick profits
Warren Buffet said that one should only invest in those assets which they know best, adding that if someone invests in things they do not know, they are essentially gambling. This is not to say that you will only accomplish satisfactory returns if you’re an expert. But if you want expert help, there are many investment advisors out there that would gladly guide you in the right direction.
Philosophy of the Rich and the Poor
There is a famous perception that financial planning entails spending what you want and saving whatever’s left then investing those little savings. The philosophy of the rich, however, is, invest your income and then spend whatever is leftover. This habit of living below your means is how the rich get rich and stay rich.
Understand the frugality approach
Are you often overcome with guilt and shame during the end of the month because of the fact that you think you’ve spent too much on something that you could do without? Do you think this is the right approach that you should have towards your expenses? Adopt frugality. Frugality is not just cutting down on your expenses but it is about selecting the things you love and spending on them and cutting down on those which you don’t love.
Cut down on borrowing money
While credit cards and loans are attractive options, few people succeed by building debt for themselves. Warren Buffet says that he has seen most people fail on leverage – that is borrowed money. He thinks that the world would run in much the same way if people didn’t borrow money at all. And, it is true that, in the long run, you will spend more by going into debt due to interest rates than if you just saved up that amount of money over time.
If you’re in your 30s and planning to become financially independant, start early so that you can be well prepared for anything life throws your way.
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