Contrary to what you are being told by the media, it is not about how much money you make, but how you manage it. How you manage your money becomes a way of life. Simply put, you are more likely to have bad financial habits if you don’t save enough and spend more than you make.

It is possible to change bad habits. The bad news is that it takes time. To become financially independent, you must first break bad habits. Poor spending habits and a plan can make you more vulnerable to unexpected events and make it harder for you to retire.

Bad habits must be broken. Are you aware of your money bad habits?

Not saving for retirement

Retirement may seem like it will never come, especially for people in their 20s. However, the longer someone waits to prepare for retirement, the less they will be able to take advantage of compounded interest. You will have more money when you retire if you begin saving sooner.

If you don’t begin saving, the worst case scenario is that you will have to continue working for a while longer because you can’t afford to retire. That’s not fun.

Dipping into your savings

After you’ve created your retirement savings plan, you can relax. It is not a good idea to spend your retirement money snooping around and promising to return it later.

The emergency fund rule is the exact same: Never touch it unless there’s a real disaster. This is because you will begin to think of this account as an additional fund and not a retirement account if you continue to dip into it. To prevent yourself from doing this, you should put up as many obstacles as possible.

Spend as much as possible

It is easy to get into debt by spending more than you earn. Debt is the biggest enemy to building a retirement plan.

Living below your means, the opposite, is more powerful. This means that for every month you live below your means, your ability and potential to save or invest increases. You will also experience faster exponential compounded growth.

Although it may seem difficult to live a frugal life, you’d be amazed at how much the small things you reduce can add up. You won’t even know they’re gone. You won’t believe how fast those RM2 and RM3 candy candies that you purchased at the petrol station can disappear.

Waiting until there is more money to invest

When it comes to long-term investment, time is your friend. This is due to compound interest. Contrary to what boomers are telling you, it doesn’t take a financial expert to start investing. It’s possible to do this all on your own.

Online brokers are available. As long as you have the necessary documents, you can open an account. There are apps such as Raiz, which automatically take a portion of your paycheck and place it for you.

Don’t wait! Start increasing your financial literacy if you are concerned about making the wrong investment. Realistically, you won’t make that much the first few years. It doesn’t really matter if your starting capital is only a few thousand Ringgit.

Putting too much money towards a house or a car

These items should not be generating income for them. You don’t have to buy a house or car. However, you still need shelter and transportation. It’s not that you shouldn’t spend a lot of money on a house or car, and then have to pay large monthly instalments.

If this is the case, then you will need to reduce your large monthly commitment. Your retirement savings will be one of the first things you will likely include in this category. Even if you are able to pay off the loan in full by the time that you retire, it is possible to not have enough retirement savings.

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