Mistakes Indians Make to Destroy Their Financial Lives

Financial planning is an integral part of our daily lives. Irrespective of whether we are millionaires or people with decent jobs, it is not possible to get to where you want to be in life without a good bit of financial planning. That said, there are a lot of things that Indians do wrong today when it comes to their financial lives.

This post is dedicated to all of you who struggle with your finances and hence, end up doing the wrong things. Here are some common mistakes made by Indians that can prove to be counterproductive for their financial lives!

1. Buying Items Merely Because They Offer Discounts

The e-commerce world is full of temptations today. From Flipkart’s “The Big Billion Days” to Amazon’s “Great Indian Sale,” no aspect of the online shopping world has been spared of heavy discounts. These sales do nothing but encash on the weakness of Indians day in and day out to buy things that are on a discount, regardless of whether they need it or not. These sales pop up every month, so just imagine the kind of money you throw away on these deals!

2. Getting Tempted by Exotic Vacations

Facebook and Instagram are social media platforms that have taken over our lives today. These platforms are invading our privacy and ruining our relationships. From making friends feel jealous of each other’s vacation to the people they are dating, these marketing platforms have become a space of getting likes and comments, just to feel good about ourselves. So, the next time you get tempted seeing your friends on social media visiting exotic locales, think twice before splurging on the same wishes!

3. Spending Extravagantly on Weekend Parties

This again goes hand in hand with bad financial decisions. People work 5 days a week and splurge the rest two days on parties that cost a bomb. This new culture has infiltrated the Indian community where pubs are usually jam-packed on the weekends, and the drinks cost a month’s salary. At the end of the month, we are left wondering and scratching our heads as there is absolutely no money to be seen anywhere.

4. Not Tracking the Cash Flow

It is rare to see people these days keeping track of their expenses. This is a very crucial aspect because if you can keep track of your money, you know where you spent it and where it came from at all times. Hence, there are absolutely no surprises if you run out of money because you can check exactly where it went.

5. Not Having an Emergency Budget

Emergencies do not pop up with a prior warning. Also, most people do not think ahead and fail to set aside an emergency budget in times of need or for the rainy days. This can often result in embarrassing situations where you find yourself borrowing money from relatives and friends. Sometimes, people even take things one step further to break their years’ long investment, which can be a dangerous thing.

6. Not Having A Medical Insurance

There are countless people who lose their life’s worth of savings simply because they were stupid enough not to have proper medical insurance in place. It only takes one accident or illness to shatter all of your financial dreams in a matter of seconds. Therefore, it is always a good idea to be insured because the cost of healthcare is rising day by day and most individuals, as well as families, cannot manage these exorbitant costs without adequate insurance.

7. No Financial Planning

Most people are also unaware of their financial goals or why they need to save money. This is precisely why they indulge in zero financial planning and make impulsive decisions when it comes to their money. This can be a recipe for disaster as not having a carefully laid-out plan when it comes to your money can be counterproductive in the long term.

8. No Diversification

When it comes to investments, most people do not understand the importance of diversification. They either invest all of their money in gold or in real estate. Some keep it all in a locker while others invest it all in the stock market. It is paramount to understand that diversification in investments cannot be stressed enough. DO NOT save all your eggs in one basket!

9. Spending Your Entire Hard-Earned Savings on The Wedding of Children

We live in a hypocritic society where people save their hard-earned money their entire lives, only to spend it all on the wedding of their kids. They also spend it on random relatives who could not be less bothered about their own children. It is also about which family has spent more money on their kid’s wedding and who has spent more lavishly and getting their kids married off recently. With no rhyme or reason, people continue parting with their savings over frivolous and impulsive expenditure just to show off and boost their own self-worth.

10. Buying Exorbitant Amounts of Gold and Keeping It in The Locker

Indians use their bank lockers barely once or twice every year. Yet, they buy lakhs worth of gold and store it in their lockers. This is one mystery that boggles our mind. What is the use of buying gold when you are ultimately going to store it in the locker and get no returns on it? This essentially means that people buy this gold to get it blocked in a locker with no evident reason or logic. There are far better ways of investing in gold like the Sovereign Gold Bond Scheme, which offers interest on gold bonds. In addition to that, the capital appreciation also has a significant indexation benefit.

11. Investing Conservatively

Traditionally, people are risk-averse. More often than not, people believe in getting a fixed deposit that gets them an annual interest of 6-7%. Others just prefer keeping all their cash at home or in a bank instead of investing it. Although being prudent is essential when it comes to your finances, nothing good ever came out of investing conservatively.

12. Lack of Clarity Between Liabilities and Assets

Another important difference between fail to understand is the one between liabilities and assets. Owning a car is more of a liability than an asset as it comes with a maintenance cost and consumes a fair bit of fuel as well. In addition to that, the price of the car is only bound to depreciate as time passes. Although cars might be a necessity for some, you do not need to splurge on luxury cars or even take loans to buy the ones that are way out of your budget. Sadly, that does not stop Indians from doing it anyway. On the other hand, an asset essentially puts something in your pockets such as rent from a property, interest from bonds, capital appreciation from mutual funds, and much more.

13. Confusing the Words “Frugal” And “Cheap”

Many people confuse spending economically with being cheap, which is simply not true. An economic spender is smart and does not compromise at all with quality. Such people do their research and buy the best services and products at cost-effective prices. Therefore, frugal is definitely not cheap.

14. Procrastinating Investment Decisions

How many times have you said to yourself, “I will invest tomorrow” and never done it? Tomorrow, indeed, never comes, and procrastinating investment decisions is never a good idea.

15. Spending Heedlessly on Fancy Things

This mistake goes hand in hand with some of those mentioned previously. A fancy home, a fancy vacation, a fancy car, or anything fancy is what people want to today. This obsession has grown by leaps and bounds, and people are even willing to pay a hefty premium regardless of the value of the item.

16. Being Impatient

People today are also increasingly impatient when it comes to their money. They want their wealth to grow as soon as possible. They wish to double all their investments in half a year. They wish to indulge in risky stock market investments. This is a very bad idea because it can have the opposite effect and you can end up losing all your money in the process. Therefore, you need to patient in order to understand the best investment option for you

17. Relying on The Advice of Friends and Not Hiring A Financial Coach

Another common mistake people make is asking friends/relatives to manage their money. This is the worst decision you can make as trusting Half Knowledge Friends with your hard-earned money is simply foolhardy. If you do not know much about investing, you would be better off consulting the best financial advisors in India than giving all your money to a friend to get him/her to invest it. It is a good thing to remember that a person who does not have the required expertise will end up playing with your hard-earned money, which is simply not a good idea.

18. Refraining from Discussing Money in The Family

Indians usually do not discuss the matter of money in the family. These discussions are considered to be a taboo and so; people end up in more financial distress than contentment. In such a scenario, a family is left to struggle alone in case of unforeseen death of the primary earning member of the family. This can lead to further financial troubles as well as emotional trauma.

19. Getting Carried Away with Investments

Greed is a very dangerous attribute to have in the world of investing. People usually invest their money blindly in penny stocks, futures, day trading as well as options. The end result is that they end up losing all their money because of GREED.

20. Lack of Knowledge About the Art of Personal Financial Management

And finally, we come to the root cause of damaged financial lives – lack of knowledge about financial management. Most people do not know the basics of finance or investment, which is why they end up making all these mistakes in the first place.

Final Words

Therefore, if you wish to avoid making the same mistakes, contact the best & Experienced financial planners today to enjoy high returns investment in India!