5 Money Mistakes To Avoid If You Want Financial Independence
My six years old returned from school one day and asked: “Mommy, what is the cost of money?” I looked her in the eyes, and I could see she was serious. Wondering how she came about such question I considered advanced for her age, I told her we would talk about it after she had her food, and done with her homework.
Her question got me thinking, and I realized how many out there are searching for answers. The failure to resolve this challenge by many adults is the reason they lack financial independence. Unless you understand that money has a cost and be willing to pay it, becoming financially free may be wishful thinking!
What is money?
It is a means of getting what we need, that’s why it’s called a medium of exchange. It helps to acquire wealth and pay debts. Anything that does these things is called money; there are four types including Commodity money, Fiat money, Receipt money and Fractional money. However, discussing types of money is not the scope of this discussion.
To have money, one must generate it. While work is important to have money to enjoy all it could provide, working isn’t the cost of money; it is only a process of acquisition. You may still have money without working. So, at this juncture, you want to repeat my daughter’s question:
What is the cost of money?
The real cost of money is any action taken to retain or lose money. It is when your bank account ledger shows a positive balance that you have money available to meet all the functions of money. If your actions only fritter your money and leave your ledger balance in negative, you don’t have money.
1. The money mistakes that leave many broke
I said in the last paragraph that the action you took to retain or lose money is the real cost of money, this means you can either be making mistakes about money or getting it right. The following are answers to the question regarding the cost of money and financial independence:
2. The mistake of working for money
From the definition of money, it is something we use to get what we want. But if you treat money as anything other than that, you will be making a huge mistake. Working for money suggests trading your time, energy and intellect to generate money. But will such method give you a positive bank ledger enough to meet all the functions of money and be financially independent?
Instead of working for money, the best way to financial independence is to have money work for you. While the majority will start by working for money, only those who understand the implication of doing that continuously can to break the circle and make money work for them instead.
3. The mistake of not having long-term financial goals
Another mistake robbing many of financial independence is lack of long-term financial goals. This is how much you plan to have saved to meet your future expenses. When you work for money as a salary earner, you will earn income, weekly or monthly, for work done. Unless you put away some of your income for such target savings, your financial independence is at stake!
4. The mistake of having no spending plan
Your spending plan is as important as your income generating plan. It is important to know that there is nothing you ever bought that will seem a waste of money, meaning you can justify every expense. But no matter how reasonable is the expense; you need to do it only if it’s in your spending plan. If it’s not, let it wait until you add it up. Never spend a dime outside your budget unless it is a life-threatening emergency!
5. The mistake of not planning for retirement
No matter your source of income, saving for your retirement is non-negotiable! Many in active life today forget the days when they won’t have the same energy to generate money. If you want financial independence tomorrow, don’t make this money mistake today.
The list of money mistakes is endless, but the ones discussed here are crucial to your financial independence.
My answer to my daughter’s question is that the real cost of money is the resistance to spend unwisely and the urge to take action at the expense of our limited time. The time mommy would go to work and won’t play with her, the time daddy would apologize for not buying another toy because it’s out of our plan and the time she spends doing her assignment and going to school to learn towards becoming a responsible adult.
Those are the cost of money. Anyone who fails in these is making money mistake and sacrificing financial independence!
More in Financial Adviser
Nick and Priyanka Vacationed in This Stunning Tuscany Villa Which Is Almost Impossible to Afford
Binge-watching Stranger Things on Netflix, partying out with friends, reading a book, or playing video games – these are just ways...July 20, 2019
Cardi B Threw Her Wig in the Crowd and One Lucky Fan Is Now Auctioning It on eBay for an Astounding Price!
When you are in the zone, you tend to get carried away. The same goes when you’re doing something and you...July 19, 2019
Warren Buffett Is Impressed by Alex Rodriguez’s Business Acumen, Here’s Why We Are Too!
Alex Rodriguez is the man of the hour – from soon-to-be marrying his highly successful fiancé, multihyphenate Jennifer Lopez, to handling...July 18, 2019
David Beckham and Simon Fuller No Longer Business Partners! What Will Happen to the Beckham Brand?
More than two decades in doing what he does best, David Beckham announced that he was retiring from football at just...July 18, 2019
A Saudi Prince Just Spent a Staggering $52 Million on This Mega-Mansion!
There’s no doubt that California has become a popular state among the powerful and affluential who’re pouring millions into homes many would die for....July 18, 2019
These Celebrities Show That You Can Be Successful in YOUR Businesses Too
Stardom is oftentimes associated with glitter and gold. Although this may be true to some extent, celebrities are well aware that...July 18, 2019
These Tips from Frugal Celebrities Show You Can Be Rich and Tight with Money at the Same Time
Celebrities oftentimes automatically receive the bad rep of spending what seemed to be their gazillion earnings frolicking on expensive getaways, swimming...July 18, 2019
Priyanka Chopra’s Dog Is Living the Luxurious Life We All Wish We Had
Getting a dog is a lot of hard work and can be likened to raising your own child, sans the education,...July 18, 2019
After Uber’s Colossal IPO Fail, Co-Founder Garrett Camp is Venturing into Another Lucrative Industry
Amid the recent controversies surrounding Uber’s dud of an IPO, its multi-billionaire co-founders, Garrett Camp, and Travis Kalanick are expanding into another thriving industry: real...July 18, 2019