Common Money Mistakes

People are not SENSITIVE about the money they earn. They work for money but they don’t let the money work for them.

Mistake in Saving Bank Account

I was surprised to see that the people don’t care about the money. They work hard to earn it but they don’t work at all  (forget about hard work) to invest it.

I had seen the saving account of so many people,  they keep lakhs of rupees in their saving bank account !

They don’t know that the Saving bank give them only 4% rate of interest. If they do the Fixed deposit of the same amount in the same bank they will earn @ 8 to 9% rate of Interest. Even if we assume that the person has to give income tax (Assume maximum @ 30%) even then the Net earning will be 5.6 to 6.3 %  which is more than they are earning from their saving bank accounts.

But I am surprised to note that people are not SENSITIVE about the money they earn. They work for money but they don’t let the money work for them.

Leaning : Check your bank account are you also keeping the huge amount in your saving bank account ?

Mistake of Non Filing of Nominee:-

I have seen the lot of people, who have not filled the nomination detail in their Bank account, PPF, insurances and other Financial transactions.

 

 Result of the mistake:-

Father of Raju had died. It was great shock for him. But he has to maintain his family after the death of his father. He want to bank to claim the money laying in the bank account of his father. But the Manager informed him that his father had not filled the nomination details and therefore he can not take the money from his father’s bank account. After the great struggle of 3 years in court, Raju proved that he was the son of his father and only legal heir after the death of his father.  Raju had to incur the heavy expenses apart from mental stress to fight the case in court for three year and  maintain his family in hardship due to little mistake of his father.

  

Learning :- Check you Financial records such as Bank accounts, Insurance, PPF etc whether you had mentioned your Nomination Details  so that your near and dear need not suffer after your death?

Mistake of not taking about money

I have seen lot of parents who do not take about the money with their childs and wife.

Learning : Let your near and dear ones know your balance Sheet and feel proud of you. Talk about money and Financial Products such as Fixed Depoits, Shares, property details with your near and dear one and involve them in decision making process. Guide them to build their strong balance sheet and Profit and Loss account.

Mistake of Not keeping the Financial Records

Learnings : Keep watch on each and every finance document and keep  file them properly. It may be boring task but  you and your family will  receive rewards of maintaining the proper documents  throughout your life . It is worth to maintain  proper records .

Mistake of Over diversification of Funds

I know so many persons  who have saving bank  account in more three to four banks. Insurance from three to four companies, shares in more than 50 companies……

If keeping the account in one bank serves the purpose why to keep account in all the banks?

If you want to open the account in new bank than close the account in old bank. Same is true for all the assets

 You know the cost of over diversification. Please read the table

Result of the mistake of keeping more than one bank account :-

1.       Having more than one bank account means you have to keep minimum balance in each bank account which you can not use, (if you use there will be heavy charges)

2.       You have to go to each bank to get your bank statements/ passbooks  to see that nobody is doing the fraudulent transactions into your bank account. Thus  you are incurring the fuel cost apart from wasting your time , energy and efforts.

Even If you have the net banking you will wasting your time, energy, efforts(Remembering the passwords, login id, Risk of fraudulent transactions ) for no use to you.

3.       You have ensure the safety of all your Debits cards, credit cards , bank statements etc at all the time throughout your life.

4.       If your case is selected for scrutiny by income tax and you missed one of the bank account you may have to pay heavy penalties. 

Learning:  make your life simple. Don’t do the things which are not required to be done. Sometimes  Cost of maintaining the things exceed the benefits derived from them.  First choose your bank, insurance company etc carefully. If you have taken the decision, stick to it. Be proud of your decision. Don’t make your life and records complicated.