FFB-Post 2
A common excuse for not investing is, “I don’t have any money to invest.” This is simply not true. Finding that extra penny is essential, and every penny counts. It’s all about building your saving muscle.
The Investor’s Mindset
One crucial mindset shift I want to emphasize is to start viewing all your purchases not just in terms of their immediate cost but also as potential losses of future investment growth. Let’s call this the “Investor’s Mindset.”
Here’s how it works: Before making a purchase, consider not just the price tag but the future value of that money if it were invested instead. For example, if you’re planning to buy something worth 15 lakhs INR, don’t just see it as spending 15 lakhs. Think about what that amount could grow into if invested wisely.
The Power of Compounding
Let’s break it down with some numbers:
- In 10 years, if you invest 15 lakhs INR with an average annual return of 8%, it will grow to approximately 32.3 lakhs INR.
- In 20 years, the same amount would grow to about 69.6 lakhs INR.
- In 30 years, it could reach a staggering 1.5 crore INR.
Now, ask yourself: Is the purchase you’re considering worth more than what these future values represent? If the answer is no, then reconsider the purchase.
The Savings First Approach
Many might argue that with this mindset, they’ll never buy anything because every amount, when compounded, turns into a huge number over the years. That’s not the point I’m trying to make. The key takeaway is to save first and then spend.
Most people spend first and save what’s left. Instead, reverse this approach: save a portion of your income first, and then spend what’s left. This small shift in thinking can lead to significant changes in your financial health.
Practical Implementation
- Budgeting: Allocate a percentage of your income to savings and investments before planning your expenses.
- Mindful Spending: Before making any significant purchase, consider its long-term financial impact and potential future value if invested.
- Consistent Investing: Regularly invest your savings to take advantage of compound growth over time.
Conclusion
Adopting the Investor’s Mindset and prioritizing saving before spending can drastically improve your financial situation. This small change in thinking not only helps you build wealth but also makes you more mindful of your spending habits. Remember, it’s not about depriving yourself but about making informed decisions that benefit your future.
Stay tuned for the next post, where we’ll dive into specific strategies for building and maintaining these financial habits.
For Post 3 – Click Here -> Avoid Debt at All Costs