Financial mistakes to be avoid this Dussehra
We just celebrated Dussehra or Vijayadashami. This is a time for reflection so that we may recognize our vices and take action to overcome them. Similar to this, we all have negative habits when it comes to managing our money, and if they are not corrected, will eventually prevent us from living affluent lives.
Here I am highlighting10 bad financial habits we could have and advice on how to overcome them.
1) Mirroring the investment portfolio of people around you
The most prevalent bad financial behavior is mindlessly copying someone’s investing strategy .This is the biggest mistake one makes since investing is an individualized activity. As every person is unique with unique life objectives, interests, and needs. Therefore, it should never be carried out as recommended by others. As a result, when one thinks about investing, one must take everything into account and develop a unique investment strategy.
2)Not setting up an emergency fund :
We cannot disregard the unpleasant shocks or other situations that may occur in life, such as job loss, sickness, an unexpected increase in your child’s school expenses, etc. If you are not ready for it, they leave you in the dark. Therefore, it is advised to set away roughly 12 months’ worth of your normal costs, including EMIs, in a savings bank account. If you want a higher rate of return, you can also choose a sweep-in account, Flexi deposit, liquid funds, or overnight funds.
3) Investing without a Goal
You don’t simply grab your suitcase and head out on a trip without having a destination in mind. Do you? Similarly, you shouldn’t make investments haphazardly. Similar to this, you should have Road Map in mind when investing. One must participate in a careful exercise of investment planning, taking into account their risk profile, the investment aim, the financial objectives one intends to address, and the time frame one have available to achieve the objectives.
4) Spending Mindlessly :
Your overall financial health is made up of a variety of factors, including your ability to manage your spending and debt, establish a solid credit history, set short- and long-term financial objectives, and develop an investment strategy. By creating a wise budget and putting priority on preserving your hard-earned money first, you may break your excessive spending habit. You’ll be able to save more as a result, leaving you with a more investable surplus to take care of some important long-term financial Goals. Putting money aside is the first step toward financial freedom.
5) Ignoring Asset Allocation while Investing:
According to the Ramayana, Lord Rama and his friends devised a plan to defeat King Ravana. Similar to this, creating an investing plan is essential if you want to achieve the desired financial goals. Asset allocation is an investing strategy in and of itself that assists you in creating a well-diversified portfolio of multiple asset classes by operating on the concept of “placing your eggs in as many baskets as you can” (equity, debt, and gold). A carefully crafted investment portfolio with a long-term outlook and holistic perspective can assist to preserve and increase wealth and reduce any high negative risk of loss.
6) Losing sight of your objectives:
According to the three traditions, Goddess Durga, Lord Rama, and Arjuna each concentrated only on one goal—beating their foe for the greater good. Similar to how you should constantly concentrate on your goal-based investing strategy as an investor. You will miss out on the long-term benefits of a happy and prosperous future if you give in to your emotions of greed, and fear, and follow the crowd.
7) Avoiding talking about money with family members:
Avoiding a financial conversation with your family members might be a serious error since they could offer insightful advice that you would otherwise overlook. One invests for the benefit of their family’s future, so in the event of one’s absence, one should be informed of the assets from which one may draw funds in an emergency or for legal proceedings. So, ask family members for their opinions and consider how your family might work together for the greatest results.
8) Lack of adequate insurance coverage:
Make sure to get the best possible life and health insurance. Insurance is used to mitigate the risk of an unfavorable event. Avoid combining your investing and insurance products as much as you can; keep them distinct. Consider a term plan for life insurance, and because medical inflation is growing, you need a medi-claim policy with respectable features for health insurance.
9) Not keeping up with portfolio reviews:
To be successful at collecting money, you must monitor and evaluate your investment portfolio to determine whether its performance is assisting your wealth-building journey and whether you are on pace to meet your financial objectives. It is very important periodically review your portfolio. It’s critical to eliminate failing assets and those that don’t closely match your desired level of financial success. Additionally, keep an eye out for any new investment opportunities, approach them with an open mind, conduct an adequate study before making an investment decision, and effectively modify your portfolio.
10) Refusing to listen to wise counsel :
According to the Ramayana, Devi Sita disregarded the advice of her brother-in-law Lakshman and crossed the Lakshmanrekha (a line marked on the ground to demarcate territory), whereupon she was captured by Ravana. Similar to how good listeners make successful investors, so do. A wise investor solely pays attention to good financial advice. paying attention to wise counsel.
Conclusion :
The Good (Lord Rama) and Evil (King Ravana) both dwell within us at this stage, and whichever personality we choose to support shapes our character as the first personality to do so.
So keep in mind that you can choose your life and take the necessary actions today to ensure a better tomorrow. To improve your financial health this holiday season, commit to changing your negative spending patterns. You may brighten your long-term financial future by making improvements to your finances, starting again, having a good mindset, being focused, and lighting the oil lamp of knowledge and wisdom.
A very happy Dussehra to you all!