10 things which COMPLICATE your Financial Life !!!

Do you know things which knowingly or unknowingly drag you into financial crunch? Being known about them but failing to practice them will be the biggest drawback of your financial life. So I tried to list them as below.

1) Sitting on FULL OF INFORMATION-Today is the world of Information Technology. With click of button you will get all information about any product or service. But having too much is also bad. So for example today if you Google about any financial product then you will find so many reviews. In reality they are not the reviews of any product but just sharing the product information. In such situation one site will say you to go ahead and another will caution you about the product. So choosing the right information about your financial life will be the tricky these days.

2) Financial Emergencies will be only to our neighbor-We have strong belief in our life that any bad things or emergencies will never occur in our life. Such emergencies are only to our neighbors, relatives or friends. Based on this mental self belief we start to advice list of things to our neighbors but forget to take care of our own life 🙂 No emergency fund in place and no proper insurance (life and health) will be a sign of such beliefs. 

3) Treating Life Insurance as INVESTMENT-When I interact with client, 95% of clients feel that Life Insurance is a type of an investment but not a product which take care of life risk. So they buy either traditional life insurance or ULIPs and they are in terrible under insured situation.

4) Treating Equity investment as ULIPs-Reason for such mind set was due to bad experience they met with costly ULIPs products. They invested in ULIPs based on agents advice that one need to invest for around 3 years and amount will get doubled after 6 years. All investors who bought such costly products are either closed them with loss or still reeling under loss. Hence if they come to know any product which is related to equity then they will be red faced 🙂

5) Staying away from Equity-If you have any goals which are of long term in nature then you must include equity investment in your portfolio. If you neglect such wonderful product for your long term goals then you are in terrible financial difficulty. Because this is the one product which actually beats the inflation in long run.

6) Hefty investment in REAL ESTATE-If one start to earn at around 25 years of age then I know that around the age of 30 yrs to 35 yrs they will have investment in real estate. Sorry…I can’t say it as an investment until and unless 100% of your money is in this investment. Because your investment in this is around 25% (loan down payment)  and rest 75% from bank which is getting monthly return from it’s investment in the name of your EMI 🙂

I agree that currently real estate is booming and no one is booking losses. But it does not mean that your 90% of savings should be towards this one asset class (EMI).

7) Not understanding the difference between NEEDS and WANTS-I met so many who are not ready to buy a term plan which cost them monthly around Rs.500 or Rs.1,000 but are ready to shop the things which they never use in their life again after few months.

Needs means things that are very much necessary for one’s life to lead. But wants are next level of needs. For example, one need to wear a clean and well mannered dress. When it turns to be branded and unlimited shopping then this habit will turn out to be WANTS. Which sometime not necessary.

There are three stages of buying which all of us undergo. First one is before buying anything. During this phase one feels that if he buy this car then it will ultimately improve his social status and he will be on top of life. Second phase is buying it and experiencing that product and enjoying his feeling with that product. Third and final stage is again the reversal of first step, where his WANTS will be increase by one step more 🙂 Means searching for the next model of car which will have more additional features to this existing car.

8) Following a herd-I saw so many people who simply buy products because his friend or relative bought it. Don’t know what this product is and for purpose they are buying. Such behavior will actually harm your financial life. So you must understand each product before buying it.

9) No documentation and sharing with relatives-I found that few follow such a strange thing that they fear to document anything related to investment. They fear that if they do so then someone will come to know about their investments. But they forget that if something happens to them then their hard earned money will be untouched by anyone, even by spouse or kids. So what is the use of such life?

10) FINAL-Not acting or postponing decisions-They do research and they understand everything about financial planning. After few days they start to shoot one or another reason for not acting on their financial decisions. This is worst and worst kind of financial behavior.