“I have a lot of money (or very little money); I need not plan”

Whether you have a lot or little money, you cannot achieve your financial goals consistently without a plan. Planning for your finances not only helps you achieve your goals, it also helps you monitor and review your progress with your finances.

“I am far too busy to spend my time on planning”

Anything new seems to be tedious at first. But it is worth ‘investing’ some of your time on acquiring this skill as it would enable you to worry less about and enjoy more of your hard-earned money. You should ideally spend time planning finances or overseeing from time to time, as no one would understand your needs and goals better than you do.

“If I earn enough now, I would have enough money during retirement”

The only way to retire rich is to plan and manage your finances well today, no matter how much or less you earn today. There are many cases of millionaires retiring paupers and of modest earners retiring rich. The difference lies in the way they manage their cash, cash flows, investment, debt and insurance.

“Investing in mutual funds is risk-free and guarantees huge returns”

No investment is risk-free, it can be either high risk or low risk and the risk is generally proportional to the returns it offers. Mutual funds are managed by professional wealth managers or portfolio managers, whose main task is to create an investment portfolio by wisely balancing the risks and returns. Thus, the objective of the fund manager becomes to minimize risks and maximize returns for the investors. But the risks cannot be totally eliminated and the returns can never be promised.

“Investing in stock markets is very risky and best avoided”

Stocks are categorized as high risk–high returns investment channel. They have over the years proved to be one of the most profitable investments. Stocks have a significant role of growth to play in a diversified investment portfolio. But some look at stock investment as a get-rich-quick formula and ‘invest’ blindly, without proper knowledge. Such people should certainly avoid stock market investments, at least until they gather some know-how about it.

“It is okay to pay the minimum amount mentioned in my credit card statement every month”

Paying only the minimum amount means interest being charged on the balance amount, which you anyway must pay sooner or later, with much more interest later. The sooner you repay all the money spent on credit card, the more beneficial the card will be for you. Paying only the minimum amount every month is one bad habit that many young people get themselves into—leading to mounting debts on them. It is best to avoid it. If you have got into this bad habit, the sooner you get out of it, the better it is for you and your finances.