(This column was first published on Value Research India.)
I read somewhere on some website on the Internet that Indians aren’t thrill-seekers. This survey had pegged us down to somewhere at the bottom of that list. We are mellow people, who like to live life in our comfort zones, the survey said. I think that’s hogwash. Anyone who thinks that Indians don’t live life on the edge has obviously not seen us mismanage our finances.
Most of us are as clueless about our finances as a bungee-jumper would be about the valley below him. He, at least, has a harness protecting him. We have none. Much like an adventure sports enthusiast, we rely solely on our instincts when it comes to our financial decisions. The unfortunate bit about this comparison is that in adventure sports, you have your protective gear to bail you out in case of emergencies. But when it comes to managing one’s finances, the ‘jo hoga dekha jayega’ attitude leaves us with little to fall back upon.
Take for instance something as straightforward as paying our bills on time. Seldom do we do it before the last day. Often we miss the due date and end up paying more than we need to. And since we have so many bills to pay – credit cards, phones, utilities – we can’t help but miss out on some of them. Many of us literally waste money because we end up paying the amount payable after the due date. An easy way to tackle this problem would be to automate your payments by linking them to your bank account. Most of us know this, but very few of us do this.
Another example of this syndrome is our last-minute rush to make our tax-saving investments. It is around this time of the year when we begin to think about where to invest to save taxes. We’re usually roused by an email from our HR department. And then we rush. This year, the rushing is going to be even more tedious because the tax exemption limit has been raised to Rs 1.5 lakh. There’s more money to be saved, so there will be more hurried investments made. Financial advisors and insurance agents and sundry distributors will be jumping at us from every corner, eager to make the best of our desperation. Far too many of us will end up buying products like ULIPs that we shouldn’t be having. Many of us will invest in one go. And thereby, we’ll kill two investment principles, often more, with one stone.
Of course, in an ideal world, we should have started investing systematically in tax-saving mutual funds at the beginning of the financial year. But then, what’s the thrill in that? Most of us are too busy for adventure sports, but we do need our share of adrenalin rush, don’t we? If we can’t bungee-jump ourselves, we can at least push our financial matters off a cliff and wait for the last minute to pull them back. We have Internet surveys to prove wrong, after all!