The results of a survey show that “In India, 76% of its population does not understand even the basic financial concept.” Of this 76%, there is a large number of people who have a source of income but do not have the basic awareness, therefore they suffer a lot. Where these people usually go wrong, let’s summarize here precisely.
Buying Insurance Policies for Investment Purposes
Very few people have the right idea about insurance. They do not understand the difference between Endowment Plan and Term Insurance Product. 95 out of every 100 people still think Insurance is an investment product. It is a dangerous and deleterious notion.
Not Able to Crack the Credit Card Trap
Any kind of credit (except a Home Loan) is a form of trap and considered a bad loan. Even today, many people fall into huge traps by purchasing Credit cards and paying a minimum amount.
No Idea About The Impact Of The Power Of Compounding
Everyone knows the formula of Compound interest but is unaware of its impact so they are spending more than investing. They delay their investment, so they earn less and invest more. They are also afraid to change their investment fund.
Buying Stocks Based On Tips Without Any Self-Knowledge
I have seen many people losing their money by being greedy and listening to others offering tips. I have never seen anyone create wealth by depending on those tips.
Becoming a Victim of Lifestyle Inflation
If there is a little hike, then many decide to move into a 3BHK from 2BHk or purchase high-value cars. In this way, people end their financial life by falling into Lifestyle Inflation pressure.
Buying Items Because They Are On Discount
This is the biggest problem in today’s Market Economy. People are running after cheap products whether they need them or not.
Getting Tempted To Go On An Exotic Vacation
Many people don’t give importance to their Future Financial life and are found saying, “We have only one life, why always whine about money?” ruining their own financial future. These people copy others and go on vacations spending more than their affordability.
Spending A Bomb Amount On Weekend Parties
‘5 days work and 2 days partying’ is going to be the new Indian culture. Various pubs are jam-packed during weekends. These are the same people who complain that they don’t have money at the end of every month. Surprising, isn’t it?
No Track Of Cash Flow
Everyone keeps a track of their inflow of cash but no one bothers about the outflow of money. Most people do not track their expenditure so they have no control over their money.
No Emergency Fund
Most people are busy with their present but an emergency situation definitely comes and when it comes, most people break their Long term investment or Compounding Effect to meet their needs. This damages the Long term investment a lot.
No Medical Insurance
Many people waste a lot of time procrastinating saying, ‘I will do tomorrow, I have Mediclaim in my office.’
No Financial Plan
Most people fail to realize that only financial products cannot give them a financial solution in today’s economy. For that, they need financial planning, too.
Spending All The Hard-Earned Money On Children’s Marriage
Many people spend their life’s hard-earned money to maintain their status for 2-3 days and enjoy that feeling. What a hypocritical society, isn’t it?
Buying Excessive Gold Only To Keep It In The Locker
Most people do not know the process of calculating the wholesale price at % return so they park their gold jewelry worth lakhs of rupees in their lockers considering them as assets. Is it safe? I will request you to think twice.
An Extremely Conservative Approach With Investment
Due to lack of awareness, many people mistake a rope for a snake and fall into the clutches of Inflation and Tax with a conservative approach.
Lack Of Clarity Between Asset And Liability
Many people believe their house and car are assets. These ideas are very human but it is important to know the reality.
Not Discussing The Money Matters With family
This problem is evident in India. Matters related to finance are always kept a secret. In our culture, a Belief Level Mind is created so that the other family members do not understand anything about money matters.
Generally, people love to copy others and follow what the crowd is doing. It is because they themselves lack financial awareness.
Getting Too Greedy With Investment
After wasting precious time due to lack of awareness, some people become greedier and run after Return which is a dangerous thing to do.
Not Knowing About Risk
In finance, capital loss risk can be avoided but purchasing power loss is impossible to regain.
Too Much Investment In The Ill-Liquid Asset Class
The maximum investment in Asset classes like Real Estate, Gold, PPF can lead to liquidity problems.
A lot can be discussed about the aforementioned points. The root cause solution to each problem is creating financial awareness. This awareness is what is lacking in today’s world and I am trying to organize a lot of Awareness Meetings at a number of places but people are unable to attend. Therefore, for them, I am trying to make a video of that meeting on my Youtube channel. Many are watching them as they are unable to attend physically. I have been writing several blog articles, I don’t know how much they are helping. It would be highly appreciated if I could know through your valuable comments.
Naturally, any person will wonder why there is such a basic lack of awareness among academically educated people. The end result of such unawareness is highly destructive, isn’t it? I would like to know your opinions.