How to fix - "insufficient space on the device" error message

Most of android users are facing a common problem now a days. That is they got plenty of space in their phone's internal/external storage media, but when they try to download or update any app it says some random insufficient storage space error. Something like - "
Error downloading the application. There is insufficient space on the device"
Well this sounds annoying to you, doesn't it? I was having the same problem so I gone through an internet search and found the cause of the problem and fixed it. You would ask how? So, here we go...