Common Money Management Pitfalls Indians Find Themselves In

By Cannon Doyle | June 25, 2015

Financial Mistake

The owners of IPL teams need to make all the right decisions and buy all the right players to win the league. Of course, the IPL has given the fans a couple of surprises, but things don’t always work out that way. Managing your finances properly is just as important, if not more, as making the right IPL team.

Here are common traps we end up finding ourselves in when it comes to handling our finances.

Track It or Lose It:

Ranbir always knew he earned quite well and when you earn well, you spend more. He loved good fashion, big brands, fancy food, club memberships, gadgets and more. He basically lived life king size.

You can spend as much as you like, as long as you’re aware of where the money goes. This was an alien concept to Ranbir. He just loved swiping his platinum credit card and getting instant gratification, without keeping an account of his expenses.

As expected, at the end of the month, he almost fainted after looking at his credit card bill and his bank balance. Ranbir then pulled his socks up and began to track and reduce his buys. So should you if you do not bother tracking your expenses.

Lesson: Track your expenses to get the first step of money management right.

Goals are not Just for Sports:

People are ready to wake up in the middle of the night to follow the FIFA World Cup but don’t find time to make life goals. That dreamy 3 BHK on the billboard, the latest car in the market, your children’s education at Harvard and your retirement, won’t be possible without defining what you want to achieve and when.

So as you rave about Messi’s and Neymar’s football skills, start planning your life goals and how to become as rich as them. One day, maybe.

Lesson: Link your finances to goals and that’s when you can realise your dreams.

Rainy Days Do Occur:

Life is full of uncertainties. Nilima Kothari, a freelance jewelry designer learnt it the hard way. She believed that mishaps only happen to others and not her. A road accident landed her with a broken wrist and a broken ankle. She could not work for 4 months. It was tough being out of work and managing medical expenses at the same time.

Lesson: Don’t be the grasshopper who did not save for a rainy day. Put aside enough for at least 3 months worth of expenses.

I Am Too Young for Insurance:

If you think that insurance is only for those close to retirement and older, think again. Understand that insurance is for everyone and can get you or your family out of a tough spot one day. Remember, the younger you are, the lesser premium you pay.

Insure not just your life, but your health and home as well.

Lesson: Insurance may not be directly related to managing your money, but in case of a mishap, your dependents will find it tough to manage without money.

Borrow, Borrow Everywhere:

Karuna Ramesh, a techie, borrowed money to buy a car, funded a laptop with a personal loan and ended up withdrawing cash on her credit card to buy some jewelry. Though she was pleased with all her acquisitions, she ended up losing most of her salary to EMIs. Not a nice situation to be in, right?

Credit is easily available for everything, from consumer durable products to cars. All purchases can be easily converted to Equated Monthly Installments. Though your dream SUV and that coveted condominium may seem nearer with a loan, borrow only as much you can easily repay.

Lesson: Rely on loans when in need and not when you feel the need to splurge.

Talk Investment:

We’ve all heard about money growing but stacking up notes under your bed or in your cupboard doesn’t help.

You have to invest money to see it grow. Of course, right kind of investment is very important.

Biswajit Chowdhury was scared of investing in anything other than fixed deposits. He holed up all his savings in them. High rates of inflation unfortunately ate up all his money. When he retired, he found his savings inadequate for his expenses. ‘Never put all your eggs in one basket’ – the age old saying has relevance in money management too.

Lesson: Diversify your portfolio according to your appetite for risk.

Learn from Kings Punjab XI and spend your money in all the right places to avoid finding yourself at the bottom of a pit of your own making.

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