Money mistakes that we need to avoid:
- BELIEVING THAT MONEY IS A ZERO-SUM RISK: There is nothing in this world that comes with zero risk. The risk may be low or high. The way to think is not to eliminate this risk, but the way to manage it.
- SHORT TERM THINKING: This has two repercussions- either you spend all your money thinking there is no need to save money and be responsible for it, or you live like a miser believing that this is the only opportunity to make money. None of these 2 is the wise choice to make. One has to play the game of disciplined budgeting.
- IGNORING INFLATION: Until you don’t think of it as a reality, you will always make the mistake of being happy with whatever growth you get on your money. This is not the right way to think.
- IGNORING TAXES: If you combine the inflation and the tax you pay on your profits, the growth that you presume, becomes narrower.
- SPENDING MONEY THAT YOU DON’T HAVE: Credit cards are the culprit here. If your buying things worth more than your income, using your credit card, you are essentially bankrupting yourself.
- EGO & MONEY: Think about the times when you make the impulsive purchasing, the reason behind that is your ego. You want to show a certain self of yours to the world or convince yourself about something.
- MISUNDERSTANDING COMPOUNDING: The dark side is that if your money grows with compounding, the same is the feature of loans. It too grows with compounding.
- IGNORING HIDDEN COSTS: Every single expense has a hidden cost. They are called the ‘phantom costs’.
- RELYING ON SINGLE SOURCE OF INCOME- Do not believe that your job has to be your only source of income.
- NOT CREATING A SAFETY MARGIN- Health insurance, life insurance- money has to be used for your protection.
- GAINING FROM OTHER’S LOSS-There is enough for everybody.
- INVESTMENT ILLUSION: That everybody wants to get rich quickly, shortcuts to apply. It’s not an overnight journey.