Skip to main content

19 financial mistakes to avoid in 2019

You can also read this on BeingFinWise

___


 As the new year begins, I wish everyone a very Happy New Year. 

 I am hoping that this year, I'll make better financial decisions & hopefully people reading this will also do so. One good first step can be to avoid making bad financial decisions and keep improvising. 

 Here are some financial mistakes one can do well to avoid in 2019 (in no particular order):
  1. Spending more than what you earn. (Rule # 1 of personal finance!)
  2. Not investing the saved money, and letting it be idle in savings bank account or worse, as physical cash.
  3. Taking debt like personal loans or keeping credit card outstanding - consequently unsustainably living in present with your expected future income. (with an inflated cost, thanks to high interest rate!)
  4. Leveraging/ borrowing for speculating (speculations often masquerading as investments, e.g.  speculating in stocks, or worse, derivatives, crypto currencies etc.)
  5. Not having a risk management plan. In other words, have a health insurance (must have) and term plan (if you have dependents).
  6. Chasing get rich quick schemes.(As a rule of thumb I view anyone offering over 12% per annum with suspicion. Evaluate things before jumping into it, especially if there is a financial commitment needed)
  7. Chasing a investment category because everyone else is chasing it.
  8. Taking claims at face value. (e.g. "assured" returns from stock markets, as brokers claim or buying the apartment you "deserve",  as the glossy brochures proclaim)
  9. Addiction - excess of alcohol, smoking, gambling (ideally, keep off them altogether!)
  10. Impulse buying to an extent that it drains your finances by month end.
  11. Not paying enough attention to your health. Cost is more than just financial. 
  12. Being a signee/ loan applicant for someone else (You may not want to repent few months/ years down the line!)
  13. Jumping to buying home for "investment" by taking home loan soon after starting to earn. (It can constrain your flexibility & and keep burning hole in your pocket)
  14. Failing in basic budgeting and tax planning. (and wondering where the money goes!)
  15. Not having an emergency fund. (Have at least 6 months of emergency fund accessible to you)
  16. Lending money to friends, especially for frivolous expenses. 
  17. Chasing the latest smartphone, bike, gadget, and so on. (see how easy it is to fall into lifestyle trap, and if your income doesn't support this, into a debt trap
  18. Not having any financial goals (Corollary- groping in the dark as far as your investment philosophy & approach is concerned)
  19.  Underestimating the power of inflation & not realizing the cost of living in future. 

This list is mostly based upon my observations and readings. Disagree with the list? Have anything more in mind? Do share :)

Wishing you a happy and healthy 2019 again! 

Comments

Post a Comment

Shop @ Amazon

Popular posts from this blog

An area of darkness ?

The title of this post finds its origins in a novel with simlar name written by VS Naipaul. Set in India, some 40 years ago or so, this is a kind of travelogue of author's brief stay in India where he found it to be full of superstitions, ignorance and darkness! Many decades and many MNCs and malls later, few parts of India seemed to have chucked off that tag, but there are many places that haven't and continue to remain shrouded in ignorance. Move few hours away from a city, travel in a second class train compartment or a dilapidated state transport bus and you get to see the dark underbelly of India Shining. As one of the characters in the movie Rang De Basanti says "Yahan zinda rehne ki jung mein logo ki zindagiyan nikal jaati hai" . So true it seems! My day today was spent being kind of lost in similar thoughts. To start with, I when I boarded the ST bus, a woman was wailing. She may be in her 20s or something, but she was crying in some peculiar musical tone. At
13 comments
Read more

Beyond the facade ...

"Hi, How r u doing ?" "I am fine" "Howzz life ?" "M doing great. Life is great." "Great. Life is great at my end too... you tell, What's new ? "Nothing special. Enjoying at Delhi" How many times has this or one of its variant been repeated! Maybe often, be in case of two friends catching up after quite some time catching up probably on a social networking site like Orkut, or catching up through chat or mails. Maybe, in case of a telephonic conversation, it may last a bit longer getting to some the specifics. But more often than not, the script is similar. Usually people are always doing great, they are always happy. The facade usually remains similar. But how much of those times do we actually manage to look beyond the facade? Maye, very rarely. Maybe many of these goody goody things are quite 'good' if not great. But often behind this are many layers - layers which are hidden from majority of the outside world by means
5 comments
Read more

Assured returns from stock markets?

Stocks (and hence mutual funds) are often sold as something that give "assured" long term returns over a period of time. While this has been true for most of the times, and all time if we consider a long enough time horizon in India's recent history but is this always true? Can it be possible that stock markets can give lesser, say 10% returns over next 10 years? Or 5 percent annual returns? Or, taking inspiration from Nicholas Taleb, a black swan event happens and your end up barely recovering 80 percent of your principal amount (i.e. 20 percent loss) -   Theoretically yes.  Hopefully no.  I am not a predictor of future, nor are thousands others who claim to have more than 1000% percent surety of future events. So, if you are contemplating taking a personal loan @ 12% for some financial need and want to be invested in a mutual fund for "assured" 12 / 15/ 18/ 25 percent returns, maybe you need to rethink. If you want to borrow money @ 12% just to inv
4 comments
Read more

The local train

That was when I saw her. She had almost missed her train. There was another in 8 minutes, but she always preferred to catch this one only. It was a long ride - Mira Road to Churchgate and it took nearly an hour to reach there in a fast train. More than three hours a day she spent in commuting. It could have been more had her home not been near the railway station. I had moved to Mumbai recently and was still trying to catch up with its pace. I was yet to get accustomed to the local trains. Slowly and steadily I would. Sometimes I wished that I stayed near my office, but it was too expensive. So I chose a distant suburb, trying not to dig a hole into my pocket and screwing my life inside stuffed trains. This continued for few weeks. I always noticed her getting to the station, catching the train and alighting at the destination before briskly walking to her office. Mine was nearby, but that was it - I never manged to talk to her. She was somewhat reclusive and I didn't have any p
3 comments
Read more

Cycle

After a failed attempt at jogging, I roamed about aimlessly when an idea struck me to have a ride in a cycle, couple of which is lying in the “recreational area”. I was longing since long to ride a cycle sans motor. There was no particular reason for this feeling; it was that just I wanted to have a ride. The 2-3 km ride was a tiring experience, especially for one who is having this after a long time; but I was gleeing all along. As an infant, I loved going about in a tricycle. Then I became too big for it and got a cycle. After several attempts and many falls, I mastered the art. I used to flaunt it in front of my friends, who flaunted theirs. As I entered teens, the bicycle seemed smaller; so I got a bigger cycle. As years progressed, I learnt to ride a 2 wheeler. Now I started to find the bicycle too childish for my tastes. I tried to reason out why I should get a 2-wheeler to go to a particular place. Sometimes I succeeded to get it, and sometimes I didn’t and had to go around in
5 comments
Read more