What are some mistakes Indians make, that are destroying their financial lives?
1) Buying insurance policies for investment purpose
Have you invested your money in insurance plan to get a return in future? Big mistake!
Out of 100 people, 95 have made this mistake.
Very few people understand the difference between term plan, endowment plan, etc.
2) Not able to crack the credit card mystery
Are you paying the minimum amount due on your credit card payment?
If yes, you are trapped in credit card mystery.
On the other side, very few people really enjoy the benefits like free lounge access, buy one get one movie ticket, etc.
3) No idea about the power of compounding
Everyone has come across the formula of compounding but very few people really understand its power.
This is the reason people do not start saving early and hence lose out on the power of compounding.
Albert Einstein said that power of compounding is the eighth wonder of the world.
4) Buying stocks based on tips without any knowledge
You will find every Tom, Dick and Harry giving stock tips over Facebook, Whatsapp and TV.
Unfortunately, a lot of people fall in a trap of these people and invest money without any knowledge.
What is the end result? They lose everything!
5) Becoming a victim of lifestyle inflation
Moving from 2bhk to 3bhk just because you have got a good hike, upgrading your car because you have got some bonus are some of the examples of lifestyle inflation destroying financial lives.
Buying things just because they are on discount
From Amazon’s “Great Indian Sale” to Flipkart’s “The Big Billion Days”, everyone is encashing on the weakness of Indians buying things just because it is on discount.
Funny thing is now you will find such sales every other month.
6) Getting tempted to go for an exotic vacation just because someone put a post on Facebook and Instagram
Instagram and Facebook are introduced as Social Media Platform but they are actually destroying the entire social fabric.
Facebook and Instagram are more of a marketing platform where people post stuff just to get some likes and companies promote their product and services.
7) Spending a bomb on weekend parties
5 days work and 2 days party: This is the new culture in India.
Pubs are jam-packed on weekends where people would spend a bomb on drinks.
By the end of the month, they are left with no money.
8) No track of cash flow
Very few people keep a track of their expenses.
Most of them just don’t know where the money is gone.
9) No emergency budget
Not having any extra money in the case of an emergency result in embarrassing situations of borrowing money from friends and relative.
Some people even break their investments and make a big mistake.
10) No medical insurance
People are losing out the lifetime savings just because they did not take medical insurance.
One accident can shatter all financial dreams. Better be insured.
Healthcare cost is rising and it is impossible to manage it without insurance.
11) No financial plan
People do not know why they need to save money because they don’t know their financial goals.
12) No diversification
Some people would invest all their money in real estate, some would invest all the money in gold, some would just keep it in the locker, some would invest all the money in the stock market.
Very few people understand the right way of diversifying the investments.
13) Spending all the hard earned money on children marriage
Thanks to our Hippocratic society!
People save their entire life just to spend all the money on random relatives who only bother about the food and arrangements.
14) Buying excessive gold only to keep it in the locker
Gold worth lakhs is kept in lockers only to be used once or twice a year.
This is resulting in the money getting blocked and hence not getting any returns on it.
15) An extremely conservative approach with investment
Traditionally, people have been risk-averse.
They would just have an FD and live on 6–7% annual interest.
Some would just keep the cash at home.
16) Lack of clarity between asset and liability
Having a car is not an asset because it consumes fuel and has a maintenance cost.
Its price will only depreciate in the future.
Car is a necessity but people spend a lot of money and even take the loan to buy a luxury car over and above their budget.
17) Considering frugal as cheap
A lot of people confuse economic spending with being cheap.
An economic spender does not compromise with quality but does his research well enough to buy the product or service at the lowest rate.
18) Procrastinating investment decisions
“I will invest from tomorrow”.
But the problem is that tomorrow never comes.
19) Spending a lot of money on fancy stuff
A fancy car, a fancy house, a fancy watch, a fancy vacation.
People want fancy stuff and willing to pay a premium irrespective of the value it generates.
20) Lack of patience
“I can’t wait for my wealth to grow.I want to double my investments in 6 months. I need to invest in the stock market.”
A lot of people lose their lifetime of savings because they don’t have the patience to understand the investment option and would blindly trust anyone with their investment.
21) Depending upon others for investment decisions
“I don’t know anything about investment. Please manage my money.”
Unfortunately, a lot of people are dependent upon others with their hard earned money.
This is the reason we have a lot of self-proclaimed experts giving stock market tips.
22) Not discussing the money matters in the family
Discussions related to money are considered as a taboo in Indian families.
Nobody really discusses money matters.
23) Getting too greedy with investment
People blindly invest their money in penny stocks, day trading, futures and options.
They eventually lose all their hard earned money.
What is the root cause? GREED
24) Wasting time on unproductive things
Rather than learning new stuff and growing the skillset, people end up wasting time on social media and YouTube
25) Lack of disciplined investment
Instead of spending what is left after investing, people invest what is left after spending.
This results in undisciplined investment.
26) Root Cause
Lack of knowledge about personal financial management!!