Common Mistakes in Personal Finance [Part 1]

POSTED BY Jagoinvestor ON April 20, 2010 COMMENTS (107)

Spending more than you should

Sometimes, people spend impulsively, on things which they do not really need. Just because, your plastic card is in your wallet and you “might” need it in future makes you believe that you need to get it right now. A brand new camera, with a 100 megapixel sensor and a 2000 x zoom is available at an EMI of just 1999 per month — and suddenly you’re interested in Photography! An EMI of 2500 a month, for that magical million colour, anorexic Flat Screen TV creates a magical belief in you that your normal TV at home is now really blurry these days (not to mention really fat!)

Is there a need, to splurge on Movies and eat out, every weekend? A regular meal at home, with a movie on tv is also a good weekend, at times. With many people, savings occur, only if they are left with any money at the end of the month. This needs to change – start saving first, then spend on what’s necessary and then spend on your desires – last. Financial planning does not mean compromising your dreams or what you love to splurge on; it’s all about knowing what you need and what you don’t, & knowing it well! . Read : Can you live with 90% of your Salary

No Financial Education to Spouse and Kids

Most people are more comfortable talking about SEX rather than FINANCE to kids (just kidding.) They dont feel the need to tell their children that they have bought life insurance for them (the kids) should they be hit by a bus tomorrow (the parents, not the kids 🙂 ). Once children reach an age of maturity like 16 or 17; when they can understand things & reason well and can take on responsibilities to some extent… Please start telling them about money and finances. Once you are gone, you can’t even regret.

Kids should know what your work is & how much you earn. They should be clear on how you are saving money to fund their education, bike , trips etc. Once they know about life t it, chances are they will be a lot more supportive, would be realistic in their demands & stay well within their limits. Kids don’t know sometimes, how much pain you take in earning money. Most of the times, kids know your salary and your designation at company and assume the family to be a “higher middle class” one. Once you tell them about Home loan EMI, Car Loan, other liabilities, Retirement SavingsEducation Expenses, Marriage expenses and the medical emergencies for which you are saving, they will have a better idea about the current situation and they will act responsibly.

Parents feel a little uncomfortable, telling their kids these things, as they feel children are still young and such information will create unneccessary psychological pressure and they would not talk about their demands and be unhappy. Parents feel that children should start learning about finance and applying that knowledge, once they are in a job and start earning. I say, if your finances and spending habits are messed up today, a big reason could be that, your parents never talked about finance with you openly. The same applies to spouses. Imagine, if you had all the knowledge and best practices you have learned on this blog, 10 years ago; or when you started earning? The situation would have been very different today, wouldn’t it?

Dont let this happen to your kids: Teach them!

Imbalanced Asset Allocation

A lot of people have a tendency to start working and then never look at, or review their finances. Tax Planning is nothing more, than a “signature” on some form for them. Initiatives from their side are limited to just calling an “agent” and nothing more. When they finally look back at their finances, they find that they have 40 Lacs in FD’s and 25  lacs lying in Bank. This happens a lot with NRI’s working outside the country. These are 35 yrs old who have 90% in debt or Cash, and 3-4 mutual funds and shares bought in recent years just for “trying”. This category misses a huge amount of returns which they could have made with just 4-5 hours of planning or hiring a proper investment consultant.

On the other hand, there are investors who have no PPF, no FD, no Debt Funds, no bonds; they just do share trading, buy direct stocks, invest in just Mutual funds (pure equity). Their imbalanced Asset allocation is responsible for the huge ups and downs their portfolio takes. One year the worth of their portfolio will be 10 lacs, the next year it will be 7, then suddenly it will be 14 lacs the next year. The numbers dance with huge fluctuations, but at the end of let’s say, a decade, they look back & find they are nowhere better than their “High debt Instrument” kind of Investor brothers .

Buying products from Close One’s

Will you sell a junk product to yourself if there’s a 35% commission and it will be a burden to you all your life ? I don’t think so, but if you had to sell it to your friend, colleague, brother-in-law, sister-in-law, father’s friend etc, you’d consider it, wouldn’t you? That’s what happens in real life too.

Most times, the “Best plan” comes from one of your relatives or some one known. STOP IT PLEASE! A simple NO might hurt your relations with said person, but it will save you, your hard-earned money, rather than waste it on idiotic products, which you’ll regret for life 🙂 It’s just common sense that there are better advisors and consultants than your relatives or a close ones, unless they themselves are known and respected in the field (of finance). Read : “Papa Kehte Hain” problem in Personal Finance

Most of the readers here, have shared their bitter personal experiences, where they bought products because it came from their relatives, Uncle’s et al. This happens a lot with young guys yet to start working, and their fathers have bought policies for them and then delegated the premium paying responsibility to them once they start earning, it’s a real “burden of legacy” .

Read Part 2 of Common Mistakes in Personal Finance

Comments please , Any other mistakes you can think of ?

107 replies on this article “Common Mistakes in Personal Finance [Part 1]”

  1. Vinu Vishwanath says:

    Hi manish,
    i m an employee with one of the logistics company in pune and would like to seek your advice in financial planning, especially investment that would help me and my family ( 2 children) in next 10 / 15 /20 years for child better education and their marraige etc and thereafter for me and my wife at retirement age. i am 34 at present.

    thanks vinu

    1. Vinu

      You can schedule a call with us at . I hope you are looking for our Financial Coaching program ?

  2. Sonal says:

    Hello Manish Sir,

    Thank you for your constant support for providing financial education to investors. I have some queries. Is investing all the savings in mutual fund advisable? How is liquidity achieved?


  3. Prashant says:

    Hello Manish,

    I have been trying to learn about how to make my money work for me.

    I always felt I never had control over my money even though I earn a decent package.

    I have been in learning mode about Personal Finance recently and your blogs have been a great help. It had help me to put my financial goals in perspective.

    Thanks and keep up the great work.


    1. Prashant

      You need to change your relationship with money which we do in our financial coaching program , refer to that

  4. Amit says:

    Hi Manish,
    Just thought to take this Forum as an platform to appeal most of my Indian Friends that we spent so much efforts on earning money …but how many of us knows “How much is this hard earned money is earning of us”…….

    I think very few….I would appeal ..request all…. to follow Manish Blogs…… Its an True Eye Opener….Great work Manish..!!!
    “Papa kehet hain”….”My dear LIC Uncle Sam”….all this stuffs i would say part of most of Middle higher class Techie………

    Neverthiless…I feel really myself lucky that i came across this Blogs and now started giving 2nd thought for my investment……

    ..A true web title..Jago Investor Jago….its never too late…take professional services/advices and make money work for you (till you were working for money)…..


    1. Amit

      Thanks for the appreciation 🙂 . I am sure more and more people will “jago” 🙂


  5. siva says:

    I am planning to take insurance SBI Life – Unit Plus II Child Plan to my child who is 7 years old .i have wasted so many years without taking insurance, after going throu ur site i had awareness. please suggest me right plan by comparing various insurance plan,because i am new to this comparison. hope u guide me right plan. i am very much impressed by Ur other suggestion. i want a corpus of 30 lakhs i can invest only 10000 per month.I am eagerly waiting to see your tips on financial planning thank u

    1. Siva

      You should seperate out the Insurance from investment . Better take a Term plan for adequate cover , somewhere around 1 crore , just a rough estimate but calculate your cover using the other articles I have written , You will have to pay somewhere around 30k per year for that assuming you are 35 yrs old. Apart from this , invest the rest of the amount in other tools like Mutual funds, PPF and other things.


  6. dr kishan says:

    dear manish
    i think u have hit the bull’s eye by this article. financial education and literacy is what is lacking in india and therefore the innocent indians are being looted by these companies by misseling their products. lots of people have praised u above and therefore i shall not do the same. i really feel u should start a “financiology” lectures series as a distant education program. u have the spark for bringing the financial revolution in india and the earlier u do the better. is there any way we could include this subject as a part of the education program in india? i really want that my children should not suffer as i did due to the lack of financial literacy. we can all be ur army for the this struggle.
    truly speaking u are doing a great job. just keep doing it

    dr kishan

  7. Ashish D'souza says:

    Hi, since we on a discussion about personal finance here’s a little brief about a Personal Finance Magazine, Moneylife i work for, and our new venture a Non-for-profit organization called Moneylife Foundation

    Moneylife Foundation is non-profit organization for education and protection of consumers and investors
    Moneylife Foundation supplements the efforts of regulators and companies
    In spirit, Moneylife Foundation is an extension of Moneylife magazine spreading financial literacy.

    We have a weekly free workshop on “How to be Safe and Smart with Your Money”

    Based on unique Content developed by Moneylife editors and researchers which includes the tips and tricks of

    – Avoiding Blunders
    – Smart spending
    – Sensible Borrowings
    – Smart Investing
    – Right Insurance

    The session will be conducted by Ms.Sucheta Dalal, Consulting Editor, Moneylife and Mr. Debashis Basu, Editor & Publisher of Moneylife Magazine

    Registration to Moneylife Foundation is absolutely free..

    For registrations, workshops and details on Moneylife Foundation and Moneylife magazine visit Also interact with us on Facebook at!/pages/Moneylife-Foundation/370944962452?ref=ts

    Do help us in our mission and spread the word.


    Ashish D’souza

    1. Ashish

      I was talking to Ms.Sucheta Dalal to some weeks ago over phone, moneylife is a nice initiative and best to luck to your guys . Is moneylife conducting sessions in other cities as well ?


      1. Ashish D'souza says:

        Hi Manish,

        Thank you so much. Moneylife Foundation intends to conduct workshops in other cities as well. We have had a great head start and surely looking forward to expand soon. Please help us by spreading the word and let us know if we can conduct our workshops in other cities as well, and reach our goal to spread financial literacy.



  8. Jagbir says:

    Just met a 26 years old guy 2 days back. God! I was stunned after hearing his views towards financial planning. He is working in IT, here at Bangalore, studied in UK and earning very well. He invested and always invest (that’s what he told initially) only in NSC and Insurance (endowment/normal policies etc.). Last year, he has invested 1 lac in NSC and around 3 lacs in Insurance. I must say the agents he is dealing with are having a fortune.

    He is strictly against stock market or related things (MFs) and after seeing Satyam fiasco, he is not going to invest a paisa in these instruments. I spent good time arguing with him about his approach. Referring him to your blog and gave so many examples to prove that there are better approaches. He is working hard to earn money and I just told let money also work hard for you. Phewww! at last he seems convinced and told that he is going to read article on jagoinvestor and to call me soon to discuss further to overhaul his portfolio. I felt so relaxed after hearing such words. But I must say there are lots of such people who are working day/night to earn money and unintentionally laying it unused or misused by investing in so these instruments which even not able to beat inflation sometimes.


  9. rajivahuja says:

    Well Shubha is right when she says that you have brought about a change in people’s thought process (financially) which is very important.Please keep up the good work.May God bless you .

  10. Shubha says:

    Hi Manish,
    I’ve been reading your blogs from a few months though this is my first comment on your blog…i bet everyone’s lives have changed after reading your blogs!!! You certainly have changed ours! Keep up the good work.
    The most common mistake people make is that they dont want to change or learn something new. They’ve see their parents/relatives/friends investing in endowment policies/ULIPS , so its good for them to0! Expecting our parents to help us on these issues are irrelevant as there were no term plans or ULIPs(nor they had internet:) to educate them)….the only insurance they ever knew was LIC!!!! A few people would have been a lot better if they had followed their parents on “NO LOAN-NO CREDIT” policy!!!! The only way the future generation can be made aware is by introducing personal finance as a subject in 9th/10th grade OR there are millions of Manish’s around!!!!!!
    What do you say Manish?

    1. Shubha

      Woo .. I am delighed 🙂

      You are definately correct . Change is the only constant and the environment today demands change in the way we invest and look at our money , the strategies which worked for our parents will not work for us today . Pass on this blog to almost all you know and be a part of the mission 🙂


    2. partha iyengar says:


      Manish is always obviously doing great job at educating and empowering investors to take informed decisions on their personal finance/investing..

      Good show, Pal..for the great work you continue you to do..

      thought would want to share an interesting thing that’s shaping up.. are absolutely right..savings, finance and investing should be added in the curriculum at a very early age..

      Infact, our regulators RBI and SEBI through NISM[National institute for securities and markets] have already initiated programs to reach out kids and teens in schools and colleges..

      In fact, for the record RBI is probably one of the very few central banks which have initiated programs to educate kids at a very early stage on the merits of saving and banking through simple videos/stories through cartoon characters..

      These programs are gradually gaining momentum [ since currently these are pilot projects] and very soon we would see a very concerted effort by our regulators to educate and empower our younger generation to manage their personal finances better..

      These initiatives in the next 20 years would in all likelihood ensure that we don’t get into a debt trap like the western world citizens are going through now..

      1. Shubha says:

        Partha Iyengar,

        Good to know RBI & SEBI’s are trying to educate the students..Thanks for letting us know such sites do exists!

      2. Thanks for the links 🙂


  11. Rakesh says:

    Hi Manish,

    As always great article. Just want to share something though might not be the appropriate thread. I had just been to State Bank of Bikaner & Jaipur to get account opening form for PPF for my spouse. The staff mentioned that inorder to open a PPF account we would have to have a savings account in the bank. When i said that few years back i had opened a PPF account without any savings account, she said that now savings account is mandatory. Can individual banks have their own rules. Is this not daylight robbery wherein we would have to keep minimum balance in savings account and then open a ppf account.


    1. Rakesh

      As far as I know , there is no such rule, however the repulsion from bank side is expected . they do not earn from PPF accounts , the money is credited to RBI the same day . As Bank to show the rules to open a PPF account and where is it mentioned . tell them that you will enquire with RBI about this and send the main to banking ombudsman . I am sure it will help 🙂


  12. Shiva says:

    Excellent Post and a great eye opener for many who tend to mostly overlook these mistakes!

  13. kapil says:

    Is Taking money out of the EPF account while switching jobs can be considered as a mistake ? 🙁

    1. Kapil

      Not exactly a mistake . If you have taken if out because you really needed that money and cant live without it , then you have done right . However if you have withdrawn it for no strong reason and could have avoided it , then its not a very good thing . the reason is that EPF is a forced saving , generally if we give a choice then no one is going to save with discipline , also you have lost the opportunity for that money to grow at risk free 8.5% return .


  14. Pavan says:

    No manish not at all ! Thats too much even for me.. 😉
    I just meant u can do with Nokia E 71 or 63 no need to buy blackberry for example (not to consider those ppl who actually have a business need for blackberry).. or a digi cam of 10K instead of 15-20K..

    1. Pavan

      Got it 🙂


  15. mukul says:

    hey great article as usual Manish,
    Great points you have mentioned, increased salary then increased expenses. very less people put that new income aside for investment.
    Also when you say no policies from close friends. WEALTH PLUS, had a very nice genuine uncle suggesting (rather confidently) that this is UNIQUE/GUARANTEED product and I shud-shud go for it. I refused rather gently but with a firmness. i have other plans for same money.
    introducing money to kids, started that for my lil gal. she will know it all(just like i plan to teach swimming,cycling etc)
    I was aware of Asset allocation but learned different classes at this very blog. So I will be eternally thankful to you for that. Completely agree with Can you live with 90% of your salary. Well I can and I am doing it for quite some time now.
    Thank you Manish. I keep visiting this blog for the reason that it reminds me the value of my hard earned money and how to make my money work for me.

    1. Mukul

      I am delighted to hear that 🙂 . thanks for the complements .. oops .. too much for the day . Good to hear your resistence to your friendly uncle 🙂


  16. Pavan says:

    @ Roopesh
    Yes its a dirty rat race.. where show off spoils life of many in the long run!

    @ Hemant
    OMG 43 Policies… he must be so proud of having those policies till the time u share the reality ! LoL

    Yea spending more than necessary/afford is defi true. But somehow I feel present generation spends too much on such things.. Even if they can afford I wish if they save the same amount at an early age they could benefit more in long run..

    1. Pavan

      Regarding “Current Generation is spending too much on such things” , does it go back to some of the spiritual level issues like satisfaction in life , contentness with what you have and things like those ?


  17. Sai says:

    Very nice article as usual Manish…….waiting for Part 2…..:)….ur articles r very informative…..In todays world, not only earning is important…managing our hard earned money is also critical…..ur articles has boosted my confidence that I can manage my own finance….

    1. Sai

      I am glad you feel confident 🙂 . Thats a compliment 🙂

      Will publish part 2 soon . Would be great if you put your views about these common mistakes . Great to have discussion with others .

  18. Kaushik says:

    Hi Manish,

    Wonderful article. I did start on planning for my finances late in my life, as usual, and now I know how much I missed in saving money. One very prominent mistake that I remember doing is when I listened to my neighbour uncle to have a endowment insurance policy with a huge yearly premium 3 years back. I still repent doing it in the high of that moment. If only I had access to your article :(. Now I have paid the mandatory 3 premiums and planning to either close or make it a paid up policy. Thanks again for the great articles. Keep writing.

    1. Kaushik

      Thanks , you are at the most pianful position at the moment , surrendering the polic after exactly 3 yrs will give you just 30-35% of your money paid in 2nd and 3rd year. forget the 1st year premium fully . which policy is it ? What is the IRR ? Tenure ?


      1. Kaushik says:

        You guessed it right 🙂 it is an endowment policy of 500K for 16 years. Not sure of the IRR part. I would get somewhere around 700K – 800K after 16 years. In fact while taking the policy I was told by the agent that I would get around 16 lacs after 16 years. And as usual I was excited seeing the return! Later when I enquired myself I could know the actual figure, but only much after paying the first premium :(. As you mentioned, if the surrender value is less then probably I would leave it without paying any premium for 16 years. What do you suggest?

        1. Kaushik

          Yup .. better to make paid up then . Better put the money in Mutual funds and first take adequate cover for yourself .


          1. Kaushik says:


            I did some calculations and on second thought I see that surrendering the policy would be benificial than retaining it for 13 more years, here is how.

            If I keep the policy without paying any more premium (paid up) then on completion of 16 years I would get around Rs 96000/- + bonus (I am not sure about it ???) lets say another 3000/- (assuming Rs 30 as bonus for each Rs 1000). Total should come to around 1 Lac.
            If I surrender, I would get the surrender value of Rs 24000/-, then putting it in a good mutual fund for 13 years for 15% annual interest (compounded) would fetch me around Rs 1,67,000/-.

            A cool difference of 67K if I surrender the policy! What do you think?

            1. Kaushik

              Amazing !! .. You have done something which I want people do to from last 2.5 yrs 🙂

              This is what is called self-dependence analysis . Go for it ; congrats.

              I guess , the bonus would be little more than what you have assumed . In any way you will score on Liquidity by taking the alternate approach .


  19. Vivek Nath says:

    Dear Manish,

    You might have heard this n times, but let me say again. Great job in educating us all.

    Another thing I have found in most of the young guys I have met. ” Finance is too tough, its not for me, all this things are beyond my understanding and well more comments so forth”. At times I have taken some effort in at least asking them to start a SIP, if not anything else.
    And amongst the young people, the female population seemed to be most averse to even talk about investment/ savings or piling wealth in any form. I am talking of both the unmarried and married ones. The simple point they make is “Its my husbands or future husbands headache”. Many cases its the fathers who just get some ULIP or Insurance scheme.

    All in all, when it comes to finance, “Its too complicated” is the easy way to get out of doing anything. Here I feel your point on early and timely education on “No Financial Education to Spouse and Kids” might help in making them aware and not so scared of investment and managing money.

    Warm Regards,

    1. Vivek

      Why dont you send this article link to all those people you know , I am sure they will get more responsive then , Everything is tough unless you understand it . I have learned all this myself just by self-learning and out of interest . Minimum a person should be aware of very basic facts . Aversion in female population is expected for many reasons , check out

      What are your views on Parents attitude towards children taking charge of their own education funds , if a kid starts working atleast part time in some job, parents dont take much pride , they see the kind of work kid is doing , and not the initiative , what do you feel ?


      1. Vivek Nath says:


        Well did that already , in fact have been pointing people to this site and real simple ideas they can implement to at least have a head start. Thank for the clear link on women and their fear of investment. Sent it to all my colleagues and friends. In fact will share the good comments too which I have been receiving.

        About the part kids working and understanding the value of their parents and own money. I am very very much FOR IT. I have a 3 year old son and I am more than sure I will help him setup his own lemonade stand ( as Peter lynch said it). I feel helping them try something ( failure or success irrespective) is better way to tune them into finance and money.
        I sincerely believe in the words you have said and expressed in your article. And in some ways I feel the new generation of Indian kids and parents will be more open to this way of thinking( I can see the trend, acceptance in most of my friend circle).


        1. Vivek

          Great to hear your views on this . keep it up


  20. Chakrawarty M says:

    Manish and others,

    I firmly believe that these are the important factors in lack of financial planning. Lack of training from parents has been an important issue but it has to be seen in light of environment in which our parents have worked. Lack of avenues, security of govt jobs, poor salary levels and closed market policies..So when money comes hard the tendency was to save or put into safe avenues like FD or PPF etc. and not put into risky equities.

    Another issue which I have seen happening in pre-recession days (pre 2007/2008) was the way people invested in real estate. The prices were sky-rocketing and no one wanted to miss out on a share in the pie. I guess people have to also understand the basic tenets of asset allocation.

    Another thing to be understood here that one should not take these decisions hastily. High salary levels, desire not to be left behind in dream runs, lack of time for planning and easy availability of credit can make people behave carelessly but its prudent to spend enough time understanding what you are getting into before jumping.

    I keep talking to friends who have been bad on financial planning and am glad to say that this has been helpful to some of them and they at least could correct the course.

    I dont call myself a smart investor as I also woke up late. I belonged to a school of thought – thanks to my environment and upbringing where I thought hard earned money has to preserved safely and not to be betted on stocks etc..But once I understood basics of financial planning there has been no looking back. In fact I could ride thru the crash and with discipline kept investing thru SIPs. Today I have a decent portfolio of equity, debt and real estate. I also made my LIC policies paid up and went for a good term insurance. It helped me in some tougher decisions during the recession period when I had to quit a great career for family (I had to take a career break and go to US to help my wife complete here Masters and ensure that my kid has both parents together). Now that we are back, our planning has also allowed me to start off on my own without worries about future.

    Sorry for a long one..but words were just flowing.


    1. Chakrawarty M

      Great to hear your comments in full .. we love it 🙂

      I will agree that parents have lived in a different environment , however that alone can be not the reason to not change .Times are different now and old strategies would definately not work in todays environment . Once has to make sure that they are doing different than the crowd and it would be painful to see results 🙂 . Anyways .. good points you make .


  21. Milind Kotibhaskar says:

    One more financial mistake, according to me, is to consider your LIC agenet / MF agent/ ULIP agent , as your friend and well-wisher. Nothing farther from the truth. Unfortuntaly most of them have gift of gab, they talk smartly, throw the figures that will impress you and they seduce you to buy a product which is more benifitial to them rather than you.

    Always fully understand the product that you are buying, how it matches with your finacial needs and goals and what are the options available to meet these goals. Consult a financial advisor if you can not make up your mind ( trust me , it will be money worth spent ).

    1. Milind

      Thanks for your comment . Lets not make a generalise statement . I would say there are many agents who are working for both , customers and for themselves , which is fine .


    2. Sohil says:

      I read an article day before yesterday where a agent had told his client to sign the papers that’s it…but he saw one clause where it asked whether the person thinks he will require any operation(or stuff related to it soon)…As he was not keeping well he just ticked on that check box
      Later when the agent submitted the documents later came to know the agents incharge missed his Mauritius trip because the clicked that check box…
      They are more concerned about themselves nd their targets rather than guys taking insurance…

      Btw a new trend heard had started buying online term policy that too without agent interference hence company offers 15-20% freebies type than what the same is sold by least one company heard had done that…as the article mentioned

      1. Sohil

        When you guy insurance online , it comes cheaper for the reason that one does not have to pay agent , it makes sense , thats all iTerm from AR is all about .


  22. Vinay says:

    I agree with Amarnath… my point of view has completely changed… i wish, i could have read earlier… thanks Manish….

    1. Vinay

      Nice to get a comment from you . Which one of these mistakes did you like the most ? Share your views .


  23. khalid says:

    nice to read your article and points raised by you for personal finance. most of us do mistakes at the time of investing and we should try to avoid them. its part 1 and i will wait to read the other part of your article which would come i guess.

    1. Khalid

      Sure .. Part 2 will come soon . put your comments about these mistakes if you have anything .


  24. krish says:

    Great article (as usual…) Manish!!!!

  25. Pavan says:

    Other common mistakes that people indulge into:

    – they buy expensive endowment policy for all family members even if all family members dont have any income and no one is dependant on them
    – use credit cards to borrow money
    – with increase in salary spend too much on gizmos car, etc.. and people also have a tendency to take many loans for vehicle or house !

    1. Roopesh Majeti says:

      True Pavan.
      Its like a “Rat Race” in a circle. We spend more and then work more, in order to earn more and once we start earning more… again start spending more.

    2. Pavan

      I would rather say “taking more than what you can afford” in your 3rd point . Do you agree


    3. @ Pavan

      OOPS!! Endowment Policies 🙁

      Today I met an investor with 43 Insurance Policies, maximum were endowment.

      अगर आज में उससे नहीं मिलता तो वह इस साल half century पूरी कर लेता. 🙂

      1. 43 ?

        My gwad !! .. Isse accha hota ki ye 43 bacche paida karta , kum nuksaan hota 🙂


        1. Anu says:

          43 ! ! !

        2. Sohil says:

          43 bacche…ya also he wont had to pay entertainment tax on enjoyment of getting that …..un sab bachoon main sa ek brain lara jaisa nikalta toh pooori family sambhal leta..lolz

            1. Amit Anand Agrahari says:

              I think “Hate ULIP” campaign should be started by this forum asap. I myself has taken two ulip (one two years back -SBI Unit PlusII Regular and another one one year back-SBI Smart ULIP). I have surrendered the latter one but I will get the money(Present fund value-surrender charges) only after 3rd year(This information was not told to me by the SBI Life guys). In case if I wouldnt have surrendered it and had simply not paid the premium the insurance cover would have gone but the fund value would be going as per market conditions and after surrendering it in the fourth year the surrender charges would also be much less. I think its the high time that the investor must realize the fact that the deadly combination of Term Insurance+Mutual Fund( that too through SIP) is far much better than ULIPs.

            2. Amit

              Yes , for majority Term + MF is the way to go . Amit, make sure from next time you do not take anything without understanding its internals


  26. Kunal says:

    I was also the early victim of LIC Policy which a relative sold me before i joined my Job.

    1. Kunal

      Welcome to the group . Many are victims here 🙂 . What is the current status of that policy ?


  27. rajivahuja says:

    Thanks 4 the interesting article.Will try 2 follow it.

    1. Ravi

      Sure .. thanks for the comment, what are your views on these mistakes which people do ? are you doing any of them ? share your experiences .


  28. Krishna says:


    You can add one more thing like comparison with others. Like, if your neighbour or relative buy a car you want to buy the same one. Or if they buy a new flat or site taking a loan they want you to do the same. I think spouse and parents plays a big part here. So you will end up in huge debt more than you can afford.

    1. Krishna

      Very good point . Most of the financial worries and issues happen because of Psychogical issues . once we see that others are earning more , spending more , we feel like left out . the very basic fact that every body is buying flats and prices are rising every day makes us feel like there will be no tommorrow and we will be last in the queue paying crores to these early buyers 🙂

      What do you say ?


      1. Krishna says:


        Agree with you. I think because of these psychological issues most of the people choose their career with IT and suffering now.It even influenced career choice as well.:) People shiver if they hear the word recession. What do you say?


        1. Krishna

          Yup, i would agree . One should be shifting to something the like asap .


    2. Jason says:

      Yeah… keepin’ up with the Kapoors 🙂

  29. Pratik Agarwal says:

    I well agree that once children get to know how hard is money to earn, they will start spending responsibly.
    So its very important for parents to make there children aware that how hard is to earn money. If possible occasionally parents must encourage there kids to earn small amount out of his creativity this will help them to learn to be financially independent.

    Moreover all children get pocket money, no matter how small but they must be taught to save a part of it, to be utilized in future. In this way when they grow up, it would be easy for them to save.

    1. Pratik

      This is a very good point, I am sure there are many things kids can do in their free times , especially in Summer vacations to earn couple of thousands or atleast hundreds .

      One of the best thing I like about US is this , children do vocational work in their summers to raise money for their education themselves . This should happen to some extent in India too .

      What do you say ? any more ideas about it ?


      1. Anu says:

        Manish this will never happen in india. I know many indian parents they say ‘why to burden my kid let him/her just concentrate on their studies for now. They have to earn later anyway’. Most of indian kids (grown ups) are still depended on their parents not only for money matter but even for other small small decisions… I had a friend of mine she recently got a proposal from a guy n his mother told her ‘ I am the one who is still buying cloths n stuff for him etc’ Infact the mother was quite proud in telling this.. ofcourse my friend rejected the boy n she was saying i dont want to be a mother to my husband. This is the state of indian kids raised abroad ofcourse not all of them but most of them. Indian parents feel proud in all these… on the other hand i know a guy working abroad and his bank debit card n everything is wiht his parents they do all the investments etc for him. It is pity sometimes though…

        1. pratik agarwal says:

          Here I will like to add my personal experience.

          I managed to get a part time online job ( work from home ) with a salary of Rs 3,000/month + Bonus as per work. But I kept it a secret within myself, that I am doing a online job, just because of the fear that if I say my parents that I want to do a part time online job with such a low salary, they will straight way would cancel my plan.

          So we are not always sure if parents will let us do jobs with small salary just to learn.

          1. Pratik

            Good one . I feel parents themselves are not much against these things ,they mainly think about others , what they will say , what will other relatives say especially if there is some one to be compared with their own son/daughter .

            DO you agree ?


          2. Manish Billore says:

            Hi Manish,

            Thanks for starting this portal and educating them. I would like to know waht is beter option to buy a apparment on laon or pay rent and invest your rest of money?

            1. Manish Billore

              There cant be a generic answer to this . If you are a starter in career , and just want to invest in real estate because you want “great” return , then hold off .. better pay rent and live .

              On the other hand , if you are already into equity and debt and looking for some diversification and also want to have a home whose sole reason is for residential reason , then you can go for buying , however make sure you dont take loan more than you can afford .


        2. Anu

          I agree its tough to change , we are country where lot of things are coupled with each other , first our family structure , our society where there is so much of “you are lower” and “we are higher than you” depending on what you wear , where you live , what you eat . We Indians are more emotional than others I guess .

          Coming back to our main discussion , Parents have to understand at some point in future that more than what others think about us , its more important that what we think about ourself , how we feel about what we do . btw , your friend did very correct. no point in marrying some one who is too much of puppet .


        3. partha iyengar says:


          things are changing a lot in India..
          please see the comment below written by me..


      2. pratik agarwal says:

        The main problem in India is mentality of people. If an educated Indian drives a Taxi in US, than its a matter of pride for parents in India, but if an class 12 passed accounts student, handles the accounts of others for small some of money, than parents feel that its low class job.
        What they miss out is there child is learning along with earning. Also earning will make him self disciplined.

        Parents will need to understand “NO WORK IS SMALL”. If there child do any kind of legal work to earn some extra money, they should encourage there children.

        If I think myself as a parent I would be proud even if my kid sales fruits or vegetables to earn some extra money.

        1. pratik

          I think that will change in coming future, we are standing at a very important junction where a new mentality and a new kind of thinking is taking birth , in next 20 yrs, i see most of the parents thinking like you .


      3. partha iyengar says:


        Good point..

        From my little experience, I have been seeing this happening in Mumbai since 1985!
        I have seen quite a number of students especially in the B.comm or B.A. stream going for almost full time jobs..since the college timings were 7am-11a.m..
        Unfortunately, I couldn’t do jobs [though I loved to] due to B.Sc course which engaged us the whole day..the practicals etc..
        In fact, one of my class mates managed to take private coaching classes in the evenings and he used to earn pretty good..he knew how to manage time and still did pretty well in his exams..

        So..its not new in India..
        Nevertheless, its prevalent in select cities..
        And its not necessary, these kids do because of family circumstances..
        they genuinely love doing it helps them to spend/save for their goals..

        Mumbai is definitely the place..I can vouch for..
        I see that trend in Bangalore, Delhi and Chennai too..

        1. NKanani says:

          This is a very valid point. I have seen myself doing nothing at all until my first job, to earn money! So, to say, the mentality which Anu described still exists in lots of cities of our country. However, as mentioned by Partha, this trend exists only in few cities (of course, others should learn from this!)

  30. Roopesh Majeti says:

    Hi Manish,
    A good article… On similar lines, We all should remember/follow only one thing :

    “Pay yourself First”

    In the sence, once you receive ur paycheck… Reserve the chunk you planned for savings.
    Then start drafting the things/bills you need to pay. This will help you in 2 ways :

    1) Your savings will be constant in moving up.
    2) You will get a clear picture of your expenses and other things, which eat up your paycheck.

    If you follow the above 2 things, we will definitely be in a good financial stage [ atleast as startup ].

    I read the book “Rich Dad Poor Dad” and “Rich Kid Smart Kid” and their audio versions of it, which is truely excellent and is an eye-opener for the financial wisdom.

    1. Roopesh

      Nice to see your comments on the topic, I accept that one should always take out a fixed amount from salary and put in savings 🙂 . what are your views on spending habits in urban cities in todays world ? Do you think we are going in wrong direction ?


      1. Roopesh Majeti says:

        I will definitely say YES… because.. most of us, end up, planning/dreaming of having a lavish life, than how to secure for future and for the kids.
        I knew most of my friends/known-people who just enjoy/show-case lavish life, and dont even care of the future. We are not sure of the things going to be ahead of us. So, its always better to be defensive mode than corrective mode. Atleast this is my personal opinion……. Any wrong stuff i suggested/commented… ? Please correct.

        1. Roopesh

          I would say you are thinking correct . Most of the people do not plan ahead of life and whats going to come in future. we are living in a very different world then our fathers and we have much greater requirements in retirement . One has to spead wisely and save for better future .


  31. Jason says:


    One suggestion. Please try changing the brackets in your titles from [] to ().

    They’ll blend better with your overall theme.

    1. Changed 🙂

      Actually i added it because the smily ended with ) 🙂


      1. Jason says:


      2. Jason says:

        no easy way around it?

  32. Amarnath says:

    Manish ,

    Thanks for the article . Since i started visiting your blog my way of thinking about financials has dramatically changed . Thanks alot .

    Its true that you should share all your knowledge to others and enlighten them to understand basics of financials .

    I wish more readers come to this site to understand some very basic needs of FP.

    1. Amarnath

      thanks for comment , what are your views on buying products from closed relatives , epecially Insurance policies . Dont you think there will always be some biasness and personal motive behind selling the policy ? at the end no one is well wisher when it comes to money , everybody is behind making money for their own ?



      1. Amarnath says:

        Yes buying products from close relatives is little worry as it deal with personal relationship too .Its catch 22 situation .

        Recently my brtoher in law purchased a ULIP from his fathers close friend. Moreover the agent never explained the benefits / comparison with other existing products or what so ever . He sold the product based on the relation ship , not on actual requirement .

        My brother in law ultimately forced to enrol for the policy as it deals with close friendship. Though i have explained to him earlier about the ULIPs and its catch, he is hesitate to say NO as the agent is very close friend of father .

        I am sure its with every body( at least more than 80%) including me, its very difficult to handle such situation .

        One should understand that the close relative never do it for free ( esp if he is an agent 😉 ) , so one should demand explanation from him on all quires he had and take the policy only when he convinced that its right product for him.

        Finally i had to force him to cancel the ULIP , luckily it was less than 15 days that he had received the policy docs. so it dose not cost him much to cancel .

        Before i started reading the blogs I was too under same kind of ignorance , I am happy that now i am in a position to guide some body .

        No agent is ready to explain term policy , they only speak about money back or ULIP’s . So its obvious that he is not your well wisher , there is a personal motive behind it and cashing it on your relation ship which is very bad 🙁 .

        Hope the mind set of ppl changes soon.

        1. Amarnath

          Nice to see that you are atleast taking initiative to teach others what you have learned , I am sure you must be facing lot of issues in this , How many people do you know who are better then you in term of knowledge , trying to figure out what is the literacy level . Any idea ?


        2. I usually give following advise to my clients in such a situation:

          1. Put your financial planner in the loop and tell the person who trying to sell this plan to you that your financial planner has to agree for such a scheme. Of course, your financial planner should meet all the criterion of providing the required objectivity and willing to undertake such exercise.

          2. If you want to help your friend or relative, instead of buying a product help him monetarily one time with your possible resources. This is much better than linking the performance of your financial instruments.

          Hope this helps..

          1. Narendra

            2 options looks best , Generally there will be less chances where you actually have to help in reality , because most of the times its just Emotional atyachar from the person who is selling , and if we offer to loan him the money , it would not be in the best interest of the taker .


            1. I agree. Emotion has to be countered with tact and fact. Otherwise, it will be an annuity for the seller and buyer will curse himself, the relative/friend for life.

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