6 Myths Stopping You from Accomplishing Financial Freedom

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People who prefer skipping lessons that teach how to level up wealth-creation strategies are unarguably dim-witted. If you have started earning already, most probably you will agree with this statement. 

Many still wonder why there is a lack of awareness when it comes to managing personal finance. Well, there are not one or two but many reasons that have caused the common folks to stay ignorant on how to achieve financial freedom. 

Here, you will know about the 6 most common financial myths and learn some helpful tips to level up your investment game. 

Busting 6 Financial Myths 

In this section, you will read about 10 common financial myths that consistently remain unaddressed. So, here are they:

1. Cost-Cutting is the only way to Increase Savings 

You may save significantly each month by giving up luxuries like dining out expenses. But undoubtedly there are many other ways too to increase your savings. Take on a side hustle or part-time work if you have free time in your schedule.

2. Savings Must be Done in a Savings Account

Currently, the interest rates are as low as 3.5% – 4%. Thus, it is foolish to retain a sizable amount in savings accounts, as one is receiving negative returns considering inflation. Because of this, experts suggest consumers maintain a minimal amount of money in savings accounts and invest the larger portion in better options.

3. Retirement Planning Before 40s is Unnecessary

Disciplined investments when started off early can have a big influence on your savings by the time you have accomplished each of your financial objectives. 

For example, the same person needs to invest Rs.10,000 per month instead of Rs.5,000 if he wishes to accumulate close to Rs.6 Crores by the time he retires. Additionally, his goal will only be accomplished if the interest rate remains over 6% consistently throughout the tenure. 

4. Investments are Risky

As the several ways of achieving financial freedom are still unknown to many, these rumours keep on spreading. People tend to exaggerate negative stories of their peers who previously lost fortunes mainly due to uninformed decision-making. 

To become monetarily successful you need to spend time understanding the various risk management strategies. This will finally help you prepare a portfolio that will work for you passively and slowly eradicate your financial obligations. 

5. Life Insurance Policies are Optional

Investment-cum-insurance packages do not directly help you reach your financial objectives. But these schemes are crucial to get enough term life coverage. Activating a well-planned policy will fulfil your family’s financial needs in the event of your untimely death, complimenting your other investments.

6. Moving to a Rented Apartment is a Waste of Money

Owning a home has been seen as one of life’s greatest accomplishments. However, the majority of properties provide below-average returns over the long term when compared to fixed-income instruments like fixed deposits. 

Additionally, investing in real estate brings many liquidity difficulties. So, before choosing a home loan, you must reconsider your income potential, avenues of repaying and possibilities for future relocation. If you need help in getting affirmation against any of these queries, it is better to rent accommodation that goes with your lifestyle.  

It is advised to seek expert assistance if you lack confidence in taking your first steps towards attaining financial freedom. You have the option of receiving financial plans from Credmudra for several objectives. Additionally, you can benefit from our highly affordable short-term personal loans that can instantly get rid of your current problems.

FAQs on Financial Myths 

Does depending on credit card facilities help boost CIBIL score?

No, it is a myth. The best you can do to maintain a healthy credit report is to pay off the EMIs regularly and refrain from taking bad debts. Bad debts basically provide the beneficiaries with money which they do not utilise for realising any long-term goals. These debts simply add to their financial burdens.     

Is it possible to build a sufficient retirement corpus with small monthly contributions?

Regular contributions to a combination of equity and debt instruments are considered ideal for anyone looking to save for retirement. 

As a general rule, you should aim to keep aside 10-15% of your monthly income to fulfil your retirement needs. This will help you contribute 6 -11 times your salary which will make a substantial amount after considering the accrued interests. 

Is it advised to hire financial planners?

Financial mentors are professionals who have years of practical expertise and knowledge of using various tools to manage wealth. You may hire them at affordable rates to generate personalised plans on how to make the most out of markets.

Should we talk about money problems with others?

Talking about money has to be normalised to maintain stable mental health. Reportedly many couples split up just because of financial struggle which if you come to think about is a normal phase of everyone’s life. Thus, to attain freedom financially, you must consider discussing pressing issues with people in your close group.