The festival of Dussehra symbolises the victory of good over evil. Just like Lord Ram gained victory over the ten-headed evil Ravana, you too can learn from this and win over some unhealthy financial habits and gain control over your personal finance.
In this article, we will look at even such evil financial practices that you can burn this Dussehra.
#1 Overspending
Living more than your means is one of the biggest sins of personal finance management. Spending more than you earn can cause major problems in the future and hamper your financial plans. Hence, it is advised to always set a budget and stick to it.
#2 Falling For The Credit Card Trap
Swiping the credit card blindly may seem very easy. However, while doing so, if you end up spending more than you planned to, you can end up in a huge debt trap. Hence, keep a tab on your credit card usage so you can stick to your budget.
Suggested Read: The Credit Card And Personal Loan Debt Trap...
#3 Delaying Tax Planning
Most of us remember about making tax-saving investments when our CA or company HR ask for the investment proofs at the end of the financial year. To enjoy the benefits of your investments, you must consider investing in tax-saving schemes at the beginning of the financial year. This will also help you reduce any last-minute stress.
#4 Over-Diversifying Your Portfolio
Over-diversification is a common mistake in personal finance management. This can lead to decreased returns from your investments. The ideal portfolio diversification is to have investments in various individual assets that are large enough to reduce any unsystematic risk and small enough to benefit from the best opportunities.
#5 Keeping Your Money Idle
This is as good as losing your money. Invest your money in the right financial instruments for wealth creation.
#6 Focusing On Short-Term Gains
When investing in any financial instrument, most of us tend to look at its most recent performance instead of looking at its historic returns. This will only give you a short-term perspective. Instead, you must look at the asset's cumulative returns in the long run while investing for the long term.
#7 Not Building An Emergency Fund
One thing that the pandemic has taught us is that a financial emergency can arise at any moment. This could be in the form of a job loss, hospitalisation, etc. If you are not prepared for such emergencies, you may end up in a tricky situation, causing both financial and emotional stress. Thus, it is important to build an emergency fund by setting aside a specific amount from your regular income every month. Your emergency fund should ideally be big enough to help you cover 8-12 months' expenses.
Wrapping Up
Both Lord Ram and Ravana, the good and the evil, reside within each of us. It's up to us to choose which one we want to encourage to play a major role in our lives and define our character.
So, you must make the right choices and take the right steps to build a better future for yourself. This Dussehra, along with enjoying the celebrations with your family, take an oath to burn your evil financial practices, so you can build a strong financial future for yourself and your loved ones.
Let this festive season be a new beginning for your personal finance management. With the right knowledge and the right steps, you can achieve your financial goals and have a bright future.
Here's wishing you a very happy Dussehra!
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