If you are a person who is getting salary every month into the bank you must be thinking, “how can I grow my money”. But at the same time there are somethings which people do which destroys their financial life. It is very easy to earn money and then spend it on the things you really don’t need but its hard to save it. Why? Because we don’t think for the future. I always hear people saying, “Oh! I don’t have enough money to invest that’s why I am not investing”. But I say, “Bro, look at your expenses and then filter out which are necessary and which are not”. By that way they can save some part of the spending. This is one type of mistake people make when it comes to personal finance management. There are many things which are destroying people’e financial lives which I have mentioned below:
- Falling into the credit card debt: If I try to sell you a TV for Rs. 55,000 that is currently available in the market for Rs. 50,000 will you buy it from me? Absolutely not! Instead, you would probably call me stupid for even thinking that you would agree to something like that. Now understand Credit cards work in the same manner – they literally make you pay more for stuff, which is usually things that you do not need in the first place.
- Investing in the stock market with no research: I have seen several people, few of them being my friends and relatives, who invest their money in stocks of companies that are recommended by some lame guy on some YouTube channel or after reading an article from a self-proclaimed “market expert”. But there never do in depth research for it by themselves. It is completely wrong because you are giving your money to someone who don’t know how to grow or utilize it.
- Buying stuff that you do not need: And more often than not, stuff that you cannot afford. Thanks to the no-cost EMI and similar options, people buy stuff that they do not need by spending money that they cannot afford and pay EMIs that take out a huge chunk out of their salary. I have seen many people pay more than 70% of their salary as EMI for their brand new iPhone – something that will be redundant with the next few months.
- Not tracking their expenses: I have several coworkers/friends who are always complaining that they start running out of money towards the 3rd week of the month, but who have no answer when I ask them “Where do you spend all your money?”
- Not starting early with their savings and investments: I have seen people wait until when into their late 20s to start investing. The earlier you start saving, the richer you retire – thanks to the power of compounding. You need to start saving the day you receive your first salary. Also, always pay yourself first; do not wait till the last day of the month to take out your monthly investment from your salary. Instead, do it on the day you receive your salary, even before you pay rent.
- Not having an insurance plan: Things go bad more quickly than you can imagine. An accident can leave you with a hospital bill of lakhs or even worse – dead. You do not want to put that strain on your family, and you certainly do not want to spend your life savings on an ailment/injury. So better have an insurance plan and start paying their premium before anything happen. (Remember life is very uncertain. You don’t know what happens next so better have some backup)
- Extremely conservative investment choices: Having a diversified investment portfolio is extremely important. Saving your money if Fixed Deposits barely balances out inflation, so your money will never actually grow. Invest in SIPs, Stocks, Bonds, and Fixed Deposits. (But first do a in depth research and only after that invest)
That’s all about the mistakes that people make when it comes to personal finance. Your money is your asset. You have earned it after a long, tiresome job and if you are not thoughtful about where to invest it then think of it. You will be going to loose that money. If you are also making any above mistakes stop doing right away or at least keep a watch. The better you do, the better you make.