9 Financial Mistakes Indians Make -
1. Buying insurance for investment purposes.
2. Buying things just because they are on discount.
3. Going on exotic vacations after seeing someone’s post on Instagram and Facebook.
4. Spending a bomb on weekend parties.
5. No medical insurance.
6. Spending entire savings on children’s marriage.
7. Buying Gold only to keep it in the locker.
8. Lack of patience.
9. Not discussing money matters with family.
1. Buying Insurance for Investment purposes
Buying insurance for investment purposes is the worst investment decision you can make and here’s why –
1. The cash value received from Insurance is taxable.
2. The return earned is too low.
3. You will have no control over your investments.
2. Buying things just because they are on discount
Indians love the word “Discount”. The moment they see something is on discount, they want to go check it out.
We feel that when we buy something on discount we’ve gotten a good deal even though the product may not be of much use to us.
We find the idea of buying something at a price lower than that on the price tag very satisfying.
Amazon’s Great Indian Sale and Flipkart’s Big Billion Days are all encashing on the weakness of Indians buying things just because they are on a discount.
3. Going on exotic vacation after seeing posts on social media
Social media like Facebook & Instagram has taken over our lives.
We spend so much time on these platforms that they have started to influence the way we live, what we wear, where we eat , even where we want to go on vacation.
These choices directly or indirectly impact our finances.
4. Spending a bomb on weekend parties
5-days work and 2-days party : This is the new culture in India right now.
People are so stressed at work during the week that they feel a dire need to break away from their routines.
They don’t mind spending a bomb on these outings because they feel that they have earned this for slogging all week.
Consequently, they have no money left at the end of the month.
5. No medical insurance
So many people lose their lifetime savings just because they don’t have medical insurance.
Ailments can hit anyone at anytime. Without medical insurance, you not only have to cope mentally but also financially.
Given the alarming rate at which medical costs are rising, it would be a grave mistake to not have medical insurance for you and your family.
6. Spending lifetime savings on children's wedding
Indians are known for Big-Fat-Weddings.
We are also known for Small-Empty bank accounts following the wedding.
A lot of families give in to societal pressure for a grand wedding and end up spending their life’s savings and in some cases, taking loans as well.
7. Buying Gold only to keep it in the locker
Indians are emotionally attached to gold.
Gold worth lacs is kept in lockers only to be used once or twice a year.
This results in lump-sum amounts getting blocked which could’ve been invested elsewhere.
Gold gives Indians a false sense of security. But in truth, buying gold as an investment is not a good idea because returns on gold is very low.
8. Lack of patience
“I want my investments to double in 2 years.“
We have no patience when it comes to growing our wealth.
Our investments is like a tree, it takes a few years to grow but once it’s fully grown, it is self-sufficient and bears fruits for years on end.
9. Not discussing money matters with family
Talking about money at home is considered a taboo in many Indian households.
It’s an age-old stereotype that women take care of the house and men handle the finances.
But, for a family to be wealthy, all the members must co-operate.
And this will happen only if they know what’s happening and why it’s happening.
Therefore, it’s vital to discuss money matters with family.
Conclusion
The first step to knowledge is to know that we are ignorant.
– Richard Cecil
Likewise, the only way to be financially more stable is to know what you’re doing wrong in the first place.
The above are just a few of the many mistakes people make with money.
The only way to overcome this is through Financial Literacy – understanding how to handle money and grow it.
Financial Literacy is a very vast subject. You can either spend years to understand the ins and outs of finance… or you can go to a financial advisor who will only tell you the things you must know.
