7. Focusing Just On Saving
While saving may have worked for your parent’s generation, it is not a viable option anymore.
The cost of living and level of inflation is increasing at an alarming rate, so any money you save in the bank will quickly lose its value. Only those who understand their finances in this economic climate will be able to withstand these tough times.
One of the tips we have mentioned is to keep a financial buffer of around 3-6 months’ worth of money, so you can rely on it should you need it.
However, any more than this could seriously harm your chances of achieving financial freedom, as your savings will be eroded away by inflation.
You need to have a mixture of both savings and investments.
Saving takes discipline and allows you to start building wealth, but there is a cap to it. It won’t make you rich at today’s interest rates. To build financial independence, you must invest your earnings as early as possible.
Investing your money has infinite potential, and there is no cap on how much you can earn. Investing is the secret to building wealth in the long term. Whether it’s investing in the stock market or starting a side hustle, investing is something you need to educate yourself on now!