Desire for everything: When you start wanting to own everything that comes your way, it means you are headed for financial trouble. An extravagant lifestyle may be highly desirable; but if you do not have the financial wherewithal for it, it is best not to venture down that path. People wish to have luxurious phones, lavish cars and extravagant holidays abroad. In most cases, expenses on such items are incurred by swiping credit cards or taking loans, but without considering the actual financial position. Remember, all big ticket items need to be carefully planned for. You must separate all expenses into regular expenses which are necessary and discretionary expenses which are on luxury items. Only after your necessary expenses are met, you must plan for the discretionary ones.
Greed to have more of everything: Sometimes, it is not just the desire to own everything which causes the problem. The greed to have more and more of anything can also spell trouble. There are three different aspects of Greed which you should not have when it comes to financial well-being:
- Various offers and schemes offered by retailers will result in you spending more than what is actually necessary for you. Often, it is seen that tempting offers come with several conditions, which if you are not careful in analyzing, will end up in causing you greater harm than good. Hence you must always be careful in looking at schemes and offers carefully before availing them.
- Another aspect to greed is when it comes to cashing in on your investments. This is often true of equity-related investments like stocks and mutual funds. Many investors, even if they are of the conservative type are unwilling to cash in on profits, and wait to earn more. You must always fix a target for your investments and exit when you achieve those targets.
- The third aspect to greed is when you keep accumulating the same type of asset, with the greed of earning more and more returns from the same asset, simply because of its spectacular performance in the past. For example, you should not keep investing in gold because of its past performance. Similarly, you should not hoard stocks or mutual funds of a single sector or theme, simply because you must have a well balanced, diversified asset portfolio.
Jealousy: Envy is another quality which you should not have, if you wish to grow your wealth. When you see your friends and relatives with something, you want it too, irrespective of whether you can afford it or not. This can result in a financial wreck, as you do not live within your means, and rather you are always copying others. Learn to work towards financial independence by curbing jealousy.
Conceit: Very often we see that investors do not exit a particular investment, even though it is performing badly. Holding on to it because of greed is one reason. But many a time, there is a pride factor or conceit associated with the decision to hold on to the investment, simply because you do not want yourself to be proved wrong. This can result in a costly financial decision, as you may end up losing more than your current status. Had you taken in your pride and chosen to exit the investment at the right time, you could have earned more by investing in another avenue giving you better returns. So learn to keep a stop-loss on your investments and act proactively before it is too late.
Laziness in financial matters: Laziness in general is not good for anyone. This becomes even more relevant when it comes to financial matters. When you procrastinate paying your bills or put off your decision to make investments, it costs you dearly, either in the form of penalties or lower returns for your money. Automate your bill payments and act on time to avoid financial problems.
Change your behaviour to work towards a better financial life. Start today! #gettingyourich
The contents of the article are original. We would like to give credit to ET Wealth for the idea inspiration.