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India is a country which has one of the highest saving rates in the world. From our childhood our parents teach us that earning money is very difficult, so save as much you can. At an average household level, we save approx 20%-25% of our income.

If we Indians save so much of our Income then what is the reason that our savings are not enough and we are destroying our financial lives?

There are multiple reasons for this. But some of the common mistakes that we Indian make are the following:-

Money is not taught in schools & colleges

This is the biggest sin of our education system. Our teacher taught us almost everything but they never taught us how to make money. Indian education system teaches us how to score good marks and get a decent job but never teaches us how to make money.

Buying Insurance Policies

Many of us buy LIC Policies just because our relatives suggest to us. I am not saying that purchasing LIC policies are your worst decision, but trust me it is not your good decision as well. You can buy LIC policies for the safety of your family but if you buy these policies for investment or tax saving purpose then you have to think about it. There are multiple tax saving investment options that also offer much better returns. PPF, ELSS offer a much better return than any other LIC policies.

No idea about power of compounding

Most know the power of compounding but only a few of us apply in our financial life. The power of compounding works better if we start investing money at a very early age. But unfortunately, most of us never thought of investment before the age of 40 years


Albert Einstein

If you want to know more about power of compounding then click here

Buying Stocks based on tips without any knowledge

Everyone knows about the Stock market or we can say Share Market. We have seen many people lost everything in the share market. Yes, this is true. Most people lost money in the share market but because of this, we cannot say that the share market is gambling. We Indians are good in business but when we invest money in the share market we want our money to be doubled in one night. We invest money in tips. Share markets do not work on tips. It works on research, study and a lot of patience. So, if you want to invest money in the share market do not believe in tips, do your research.

Influenced by others

You know that half of India’s economy run because of this reason. If my neighbor buys a car then I also have to buy a car. If my friend buys an iPhone then I also have to buy it. Facebook, Instagram, and other social media is the best advertising platform for any company where we advertise their products by clicking pics of our new expensive gadgets and place it on our social media account and just because of this our relatives, friends get influenced by this and purchased that product. I am not saying that placing our pictures on social media is not good. But if we get influenced by the pictures on social media and purchase these items which we do not need then we have to control ourselves.

Buying excessive gold only to keep in locker

We Indians love gold. Since ancient times gold is our safest investment. But now time is changed. Gold is now not a good investment decision. If we buy gold and keep it in the locker then we our self are blocking our money and hence not getting any return. There are much better investment options available to us which are offering much better returns.

Parking money in saving account

Saving account is now basic need us. It is risk-free. Money can be withdrawn/paid at any time. But the savings account offers an interest rate of 3.5% and an inflation rate of India for the past 10 years [ year 2008-2018] has been 7.67% p.a. This shows we are getting a negative real return in saving accounts. In other words, we are losing our money. There are various alternatives of Saving Account which offer much better returns than a savings account.