If you’re striving for financial independence but never seem to get any closer to your goal, then there must be a reason for this. Just what is it that you’re doing wrong? There are five big mistakes that people commonly make that hold them back, so read on to check if you’re guilty of one of them.
1. Having a big, extravagant wedding
When you get married, it’s supposed to be the most special, happy, and perfect day of your life. We get that. But here’s the thing: how special the day is does not directly correlate to how much money you spend on it. This could relate to other big spends in your life, too, like buying a bigger house than you really need, getting a newer or flashier car, spending too much on one another at Christmas and on birthdays, and so on. Rein in the spending and focus on what really matters – each other.
2. Not being frugal enough
Frugality is a way of life, and it’s a serious way to earn financial independence. If you aren’t thrifty, then chances are that you’re never going to get there. You should always be looking at ways you can save money on clothes and groceries, cutting down your monthly bills, and finding new money-saving tricks. You shouldn’t have to look at cutting out subscriptions or luxuries because, frankly, you shouldn’t have any. Spending too much is a really quick way to watch your finances plummet.
3. Not investing
If you are trying to become financially independent, you don’t want to sit around and wait for a lottery win. You should be investing your money so that you can enjoy a passive income if you choose to retire later on. Financial independence doesn’t mean you hit a specific sum and then stop working. It means working smart, so that you have money coming in even when you stop going to the office for good.
4. Living with the wrong person
If you are in a relationship with someone who likes to make big purchases all the time, and has never come across the word ‘thrifty’, then you might be doomed to fail. If you’re in love, then that’s the way it is, and you should make a decision about whether you value financial freedom or this person more.
If you don’t think they are the One, it’s time to make a break now – before they drag you and your bank account down. When two people aren’t financially compatible with one another, either the relationship or the savings are going to disappear.
5. Not having protection in place
It’s easy to get into the habit of saving money wherever possible, and not splashing out for the extras. However, when it comes to things like insurance, you just can’t skimp out. You need to be protected for the bad things that could happen – chances are, they will. You should have health insurance, home and car insurance, travel insurance if you go abroad, and so on. Don’t leave yourself open to a big disaster that could decimate your bank account. That also includes investing in a retirement plan, which will be there to save you if you run out of money as you grow older.
Being smart with money is about more than just saving day to day. It’s about really thinking about how you use money in every aspect of your life, and how you ensure that you will have a lot more of it one day. These mistakes will prevent you from getting there.