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Common Mistakes by different Age Groups while Financial Planning!

CA Umesh Sharma , Last updated: 05 March 2024  
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Arjuna (Fictional Character): Krishna, as we journey through life, our financial needs and capabilities evolve, many a times we make mistakes while doing financial planning.  How can we ensure that we're making wise decisions at point of our life?

Krishna (Fictional Character): Arjuna, Financial planning is indeed a journey that requires wisdom and foresight. It's essential to recognize that as we age, our financial priorities and challenges change. Today, let's explore the common mistakes people make at different stages of their lives and how to avoid them.

Arjuna (Fictional Character): Krishna, What are the common mistake made by people while financial planning?

Krishna (Fictional Character): Arjuna, We will discuss the common mistakes of people while taking age factor into consideration. Since an individual thinking changes from age to age, thoughts regarding finance planning also changed as we age. So here the common mistakes made-

Common Mistakes by different Age Groups while Financial Planning

A. Mid-Twenties Person

  • Entering adulthood without a grasp on financial basics.
  • Taking loans is solution of all problems.
  • Limited knowledge of CIBIL Score.
  • Ignoring EMI deadlines and it’s implications.
  • Ignoring the power of early wealth building.
  • Taking loans for Marriage.

B. As We Hit Thirty

  • Spending on lavish, luxury items.
  • Buying Home beyond capacity.
  • Lacking clear targets for personal savings.
  • Short-term view on planning finances.
  • Not able to differentiate in needs and wants.

C. Crossing into the Forties

  • Being hesitant to change career/job.
  • Letting credit card balances balloon.
  • Failing to make a will, thinking its too early.
  • Failure to make multiple income streams.
 

D. Reaching the Half-Century Mark

  • Spending more on the brink of retirement.
  • Indiscipline towards spending retirement funds.
  • Not able to plan expenses after retirement.
  • Not having a rental property under their own name and dependent on children for finances.
 

Arjuna (Fictional Character): Krishna, what should one learn from this entire process?

Krishna (Fictional Character): Arjuna, Everyone makes mistakes, especially with money. Like Late Mr. Rakesh Jhunjhunwala says, "Make mistakes, but make sure you survive to make new ones!" It means we should learn from where we go wrong, so next time, we can mess up in new, less harmful ways.

Think of it like learning to ride a bike. You might fall off a few times, but each tumble teaches you something new, so you fall less in the future. With money, it's the same. Maybe you spent too much on something you didn't need. Okay, lesson learned. Next time, you'll think twice before buying. The key is to not make the same mistake twice. Keep making new ones, learn, and get better at handling your money. It’s all about getting up one more time than you fall.

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CA Umesh Sharma
(Partner)
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