Money Mistakes

One of my favourite quotes from Munger below:

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent” - Charlie Munger

There are about 30 money mistakes which keeps us far away from financial independence. If we focus on avoiding these mistakes we will attain financial independence faster.

  1. We don’t know about annual returns as a concept. We make stupid investments in endowment plans. Insurance is not investment.

  2. We don’t understand how much we pay for convenience, lifestyle inflation and forgetfulness in the name of credit cards.

  3. We don’t understand compounding as a concept. We forget to ride the time wave early.

  4. We don’t understand the markets. We buy stocks based on some random tips from random people.

  5. We don’t understand savings. We blow up all our extra earnings and hikes in the name of lifestyle enhancement aka inflation.

  6. We don’t understand human mind. We buy when we see a discount even when we have no need.

  7. We don’t understand life and fake life in social media. We take exotic vacations just to show off.

  8. We don’t understand neither health nor finance. We eat out everyday.

  9. We don’t understand friendship. We are engrossed with weekend party culture.

  10. We don’t understand cash flow. We don’t track them. Ignorance becomes bliss.

  11. We don’t understand budgets. We happily switch modes from luxury to economy progressively every single month.

  12. We don’t understand emergencies. We don’t have emergency budgets.

  13. We don’t understand risk. We don’t have medical or car insurance and end up managing situations badly.

  14. We don’t understand financial planning. We never plan.

  15. We don’t understand diversification. We have all eggs in one basket.

  16. We don’t understand status. We blow up all the money in children marriage.

  17. We don’t understand wealth . We buy excessive gold that gets blocked for a lifetime and gives no return whatsoever.

  18. We don’t understand risk appetite. We stay conservative all along.

  19. We don’t understand governments and insurance companies. We don’t have the nominee in place. No details are shared with loved ones.

  20. We don’t understand future value of money. We allow it to shrink by our stupidities.

  21. We don’t understand the concept of assets and liabilities. We forget generating income via assets. We end up on the liabilities side most times.

  22. We don’t understand investments. We buy homes instead of renting.

  23. We don’t understand english. We don’t know the difference between frugal and cheap.

  24. We don’t understand time. We procrastinate financial decisions.

  25. We don’t understand needs and wants. We end up buying a lot of fancy stuff.

  26. We don’t understand patience. We impatiently come out of investments before fruition.

  27. We don’t understand finance. We depend on others for advice.

  28. We don’t understand relationships. We don’t discuss money in family.

  29. We don’t understand greed. We invest in penny stocks and chits without knowing much about it.

  30. We don’t understand equity. We buy excited stocks without understanding the nuances of the markets.

I have made every single mistake above. These mistakes pulled me off financial independence track in the past 4 years. I am slowly recovering from each one of them now.

It is never late to recover from mistakes. The best time was 4 years ago and the next best time is NOW. If this list made you think twice about your money mistakes then the series has attained nirvana 🙏

🥂to learnings!