The saving habit is the foundation of all financial success but the difference between saving and investing is still a concept that most people struggle to grasp. The key to financial prosperity is realizing the potential value of every dollar that comes into your hands.
A dangerous habit, which many people slip into, is the borrowing of tomorrow’s income to pay for today’s expenditures. This will lead to a downward spiral of frustration in which you could begin to despise your job or just current living conditions. The simple answer is to simplify your life, be able to differentiate between needs and wants; clutter is not only messy but also costly due to storing, repairing and replacing.
The importance of a budget cannot be underestimated. It is important to budget using your net income as it reflects your take home pay after taxes and deductions. A common mistake people make is developing a budget off their gross income. It is a mistake because you budgeting money you do not currently possess.
Then comes the question of “how” do you invest your savings to make passive sources of income. There are a many options available that will vary due to individual preference and knowledge from high-yielding savings accounts, Retirement annuities, property investments, precious metals investing or just buying shares on the stock market each option has their pro’s and con’s associated.
Whatever your financial dream is, common sense suggests you value the importance of saving no matter what the amount and diverting that extra money you have into investments that could earn you interest or capital gain in the future. Buying a painting is an art itself, so master your technique before risking the serious money.
The old cliché is relevant when saving. Nobody plans to fail, but many fail to plan. Having a comprehensive saving plan in place, understanding your financial goals, and proactively managing your investments are never bad ideas.