Want to Trounce Your Financial Demons on Dussehra? Read This

In the financial realm, there is an eternal combat between wise investment decisions and common financial mistakes. This Dussehra aim to vanquish your inner demons before they endanger your financial stability. We urge you to be mindful of the detrimental financial mistakes and celebrate the triumph of financial wisdom.

[Read: Navratri Special - Financial Mantra: Learn the Steps to Unlock Your Financial Freedom]

So many of us aspire for a bright financial future, and there is no better day to start planning for that goal than on the auspicious occasion of Dussehra. Let's look at the Ravana (the bad financial habits) in your wealth creation journey and how it can cause financial distress if you do not pay attention to them.

Here are some of the ways to surmount them...

In this article, we will highlight some common financial habits that you should bid adieu to this Dusshera to ensure a prosperous financial future.

1. Overspending - The Impulse Buying Monster

In the era of cashless economy with online transactions through UPIs or digital wallets and Central Bank Digital Currency (CBDC), individuals are losing control over how they spend their hard-earned money. Also, many individuals swipe their credit cards on a frequent basis towards instant gratification.

While indulging in excessive spending may give you temporary satisfaction, it has a significant price. Financial stress, debt buildup, and a decrease in savings are possible outcomes. As a result, this can lead to financial stress as you struggle to meet your basic requirements and may fall into high interest debt traps.

[Read: 7 Ways to Control Your Habit of Overspending]

Additionally, overspending leaves little room for investments or savings, perhaps resulting in missed chances for your money to grow and safeguard your financial future. This Dussehra, break free from the habit of overspending by sticking to a budget and identifying your triggers. Embrace a fresh perspective on managing your money and practice delayed gratification.

2. Debt Burden - A Beast That Delays Wealth Creation

Aim to eliminate the various debts that can impede your financial future, just as Lord Rama eliminated the ten-headed demon Ravana. High interest debts, particularly those incurred through credit cards or personal loans, can significantly reduce your ability to save and invest. Consider paying off high-interest obligations first, and refrain from taking on new debt.

Neglecting your debt can lead to serious repercussions. The longer you put it off, the more interest you pay and the more challenging it is to handle. Late payments can damage your credit score, making it more difficult in the future to obtain necessary loans like business or house loans. This can be avoided by creating a structured debt repayment plan using techniques like snowball or avalanche.

3. Lack of Emergency Funds - Struggling with Financial Crisis

You can be in a precarious financial situation if you don't have an emergency reserve. Unexpected life catastrophes like medical crises, pandemics, or abrupt job loss can happen at any time. During such unplanned situations, not having a financial cushion can push you into debt.

Only an emergency fund can save you in such dire circumstances. Your emergency fund should ideally be kept at least 6 to 12 months' worth of living expenses, including EMIs, in a savings bank account or in liquid mutual funds. This financial shield will act as a safety net to protect you during unexpected adversities.

4. Neglecting Investment Portfolio Review - An Evil That May Decline Overall Wealth

Regularly review your investment portfolio on a periodic basis. Adjust as needed based on financial circumstances, market conditions, and any shifts in your financial goals. You may need to reallocate and diversify your investments over different asset classes depending on your current risk profile, investment horizon, and your new set of financial goals.

[Read: Why Investing in Gold This Dussehra Would Be a Good Idea]

Monitoring the performance of your holdings through periodic portfolio reviews is essential. You may also consider eliminating any persistently underperforming investments that are lowering the returns on your entire portfolio. You see, failing to regularly examine your investment portfolio could have an impact on its performance and cause a delay in your wealth creation journey.

5. Financial Illiteracy - The Root of Many Financial Problems

Robert Kiyosaki has beautifully said, "Intelligence solves problems and produces money. Money without financial intelligence is money soon gone."

To lead a peaceful life financially, understanding financial matters is very important. Your financial well-being may suffer if you don't improve your financial literacy. You can make poor financial judgements, which could cost you money.

[Read: Financial Literacy: Beware of Bad Advice, Financial Frauds And Mis-selling of Investments]

Spend time learning about personal finance and investment planning to get a head start on understanding how to make your money work for you. You could ask experts for advice. Financial education gives people power. The more you know about financial planning, savings, and making investments, the more equipped you will be to make wise choices.

Apart from this, there are some more bad financial habits like:

• Delay in Retirement Planning - Without a proper retirement savings strategy, individuals risk outliving their savings, compromising their quality of life in their golden years.

• Not Purchasing an Insurance Cover - It's crucial to address your insurance needs to shield yourself and your family from unexpected financial burdens. Ensures you have adequate health and life insurance.

• Not Setting S.M.A.R.T Financial Goals - Without any target, you may not be able to understand how much money you need and how to spend. Lack of financial goals can lead to aimless financial decisions.

• Not Maintaining Financial Discipline - One way of inculcating and nurturing financial discipline within you is by firmly following a financial plan, avoiding binge-spending at all costs and investing regularly.

• Procrastination - You must avoid procrastinating when it comes to investing, saving, or paying off debts. Start today to reap the benefits in the future.

This Dussehra, eliminate the given bad financial habits and embark on a new financial journey that may assist you in enhancing your financial well-being. Make this festive season a pivotal moment in your financial journey, and let prosperity be your ultimate reward. Overcome the bad financial habits in the interest of your financial health and march ahead confidently towards a brighter financial future.

[Read: How to Choose Mutual Funds For Your Investment Portfolio]

Dear Readers, let's make a pledge to avoid these poor financial habits, embrace informed financial decisions and prudent financial planning on this occasion of Dussehra. Stay connected with us for additional financial insights and to combat the evil of poor investment choices.

Wishing you all a very Happy Dussehra!

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MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.
She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.
 

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.