When you are an amateur investor you MUST know what mistakes to avoid. When you are a pro you need to make great moves.

This is the reason why at Subramoney I keep writing about critical mistakes, ordinary mistakes, general mistakes to avoid….here is another list…

1. Taking credit cards that you do not need: You need ONE credit card, not 3 or 4 or 5….at best 2. Keep the bigger one at home, NEVER take it out – use it once a while so that it keeps itself alive. I see kids with more than one credit card juggling with overstretched expenses. Avoid credit cards, avoid over spending.

2. ‘Entitled’ to spend feeling: I am 30 years of age, how can I buy a small car? This awesome sense of entitlement – depending on age or peer pressure is perhaps difficult for the earlier gen to understand, but it is very common. Do you see it in yourself? or your kids?

3. Not negotiating hard while seeking change of jobs: Depending on your comfort level of your existing job or even on your first job, try to say things like ‘Can you better that?’ – which means you are asking for a car, a better car or a more tax friendly structure – ask for something. This ‘extra’ (say Rs. 1000 per month) should go into a SIP so that at age 45 you realize how worthwhile it was – asking for that ‘something’ and the compounding power of that ‘question’.

4. Your spending power is Your Earning Power + What Your parents taught you: If you come from a rich family and do not have any financial pressures you can spend more, however if you are not so lucky, you need to be careful. Many boys and girls from ‘not so well to do’ background try to match their friends spending power. This ruins their investments. If your dad is a Vee Pee in a bank and takes you to eateries that cost Rs. 5000 per plate, does not mean YOU can afford it. Worse it does not mean that a friend whose father is a peon in a Municipal school can afford it. Look at your OWN spending habits.

5. Supporting a broke partner or friend: A romantic relationship with a guy who is always ‘looking for what to do’ or ‘taking a break for a few months’ or a ‘I will pay you later’  type of a guy can hurt a girl financially. The reverse can also be true, but normally it is a girl who is bleeding financially and the guy is living off her.

6. Girls not taking their career / finances seriously: ‘I am not the primary provider Subra Sir’ – when a girl aged 24 or age 39 says that I feel like responding ‘why do you expect your boss to ignore that body language?’ . No further comments. Girls please take your career seriously.

7. Thinking your husband understands finances! Many girls ‘assume’ that their husbands understand finance – and this can be very wrong and very very hurtful. I know one IIT, IIM grad making his wife buy a dud of a policy. She was supposed to call me – but he said ‘Ha I know everything’ and bought the WORST PRODUCT that his bank RM could sell. Good for the bank. She did not know on whose side her husband was!!

8. Taking too much risk and taking too little risk: Too much risk on the career front by joining some unkown place and own money portfolio in bank Fixed deposits. Strike a balance, quick.

9. Taking a loan to pay for that big fat Indian wedding: Whoever wants the tamasha of an Indian wedding pays for it. So if your parents want it, they pay for it. If you want it and cannot afford it, AND YOU BORROW for it – well, well this should be mistake number ONE i guess!

10. Not tracking expenses – when you have no clue about where your money is coming from and going to – it does not matter what happens to it!! Maintain accounts, it is far more important than you think……

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  1. Very nice article Subraji…especially point#9 due to which I am still suffering 🙁
    Anyways, now trying to get finances into order as I started reading your blog 1 year ago.

  2. I am 26, the second point you’ve mentioned is the most prominent among young people who have got generous pay packages. Feeling of entitlement , as you’ve mentioned encapsulates it all.

    Very good article.
    Thank You.

  3. #9 – your parents want it but cannot afford it (i mean they have the cash, but spending it will almost wipe out their kitty) – unfortunately in this case you have to fund it as this cultural baggage is difficult to offload…

  4. Recently joined a new company & the induction program had some 20 guys. When the Finance guy came to explain finance matters all the new employees at once asked(actually shouted) about when to submit LIC policy receipts for 80C deduction. Not a single guy talked about ELSS. This shows about ppl awareness.

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