(A Simple, Fun, and Warm Chat for Curious Minds)
Hey listen, my dear little genius! 😄 Today I am going to tell you about “Top 10 Mistakes People Make in Savings and Investments” it’s a very important thing, but don’t worry- it won’t be boring, I promise! Think, what is the future of your piggy bank kept in the corner of mom’s cupboard? Can the coins inside it ever be more? Yes, they can! But there is just one condition: don’t make mistakes.
Table of Contents
Introduction
So, tell me, do you know what mistakes people make in the name of saving and investing? I am telling you, when it comes to money, people behave like a bowler who hits a no-ball in cricket! 😅 You understand, right? Just like you get runs on a no-ball but lose confidence, similarly if you invest money in the wrong place, there will be loss instead of growth.
Think of one thing: if you have a magical plant that doubles your every rupee, what will you do? Be very careful! It is the same thing in the case of money too- your savings and investments are the magical plants of your future. But if you handle that magical plant wrongly, instead of growing, it will perish.
So, today we will talk about “Top 10 mistakes people make in saving and investing”. This list is like a secret treasure map for you – avoid the mistakes, and handle money wisely. Are you ready? I have a promise – keep these serious things in mind amidst the fun. let’s dive into the Top 10 Mistakes People Make in Savings and Investments. 🌱💰
Spending Everything, Saving Nothing
Hey, imagine, you get pocket money every month, say ₹100. Now, instead of saving even ₹10, you go all out and spend it all on chips, chocolates or that one video game. It’s full-on fun today, but what will you do tomorrow when you plan a movie with your friend or want to buy a cool bicycle? Your pocket will be empty, and you will be left with only one option – “Mummy, give me an extra ₹100 please!” Same goes for life. If you don’t save now, you will have nothing for emergencies or big dreams when you grow up.
Saving is like sowing seeds – it takes a little, but with time, it grows into a big tree that will keep bearing fruits. However, spending everything is like eating all the seeds. No seeds, no trees. Just a party for today, and tomorrow’s future? Destruction. Think about it, if Shah Rukh Khan had blown away all the money from his first film on vacations, how would Mannat have turned out now? Have some fun, but also save a little. Then there will be balance in life and a secure future!
Tip: Start small. Save 10% of your pocket money or salary every month. Slowly, you’ll build a big chocolate jar! 🍫💵
👉 Hidden Pro Tip: Think of your savings as paying future-you. Don’t let future-you go broke. Be kind to yourself!
Ignoring the Power of Compounding
⚡ “what is Compounding?”
Okay, so imagine you have a magical piggy bank that not only keeps your money safe but also adds extra coins to it every night while you sleep. Let’s say you put ₹10 in it and every year it grows by 10% – so after a year you will have ₹11. No big deal, right? But wait! The next year it grows by 10% not just on ₹10 but on ₹11. That’s ₹12.1! By the 10th year your ₹10 becomes almost ₹26! Now, imagine doing nothing for 20 years and it becomes ₹67! Isn’t that magic? That’s the power of compounding – your money is earning money on its own, like little money helpers working for you.
But what if you ignore it? That’s like planting a mango tree but forgetting to water it. You won’t be able to enjoy big, juicy mangoes later! For example, if your friend starts saving ₹100 a month at age 20, and you wait until age 30, your friend may have double or triple the money you have when you both turn 50! That’s because you gave your magical piggy bank less time to work its magic.
So, the moral of the story: don’t ignore compound interest! Start saving early, let your money work for you, and one day, it will turn into a forest of money. Oh, and the joke? Compound interest is like a tube of toothpaste – you squeeze out a little bit every day, and if you start early, you’ll never run out of money!
😄 👉 Hidden Joke: Compounding is like a lazy but rich uncle. He doesn’t work hard, but somehow, he always ends up with more money than everyone else!
Not Setting Goals
🎯 “Just Saving Money, But Why?”
Friends, imagine playing cricket without wickets, without a scoreboard and without knowing when the game will end. Would it be fun? No way! This is what life is like when you don’t set goals. Goals are like the “Laxman Rekha” of your dreams – they tell you where to go and keep you focused. Without them, you are just wandering around like a headless chicken, trying everything but getting nowhere. It’s like ordering Pani Puri but forgetting to tell Bhaiya how spicy you want it – total confusion! Goals give you purpose and direction. They are not just about becoming a “topper” or “world champion”, but about knowing why you are doing what you are doing. So, if you don’t set goals, you are just sitting on a train with no destination – where will you go?
Example: Imagine – You love video games, but you can’t decide which level you want to beat. You just keep pressing random buttons. Boring, right? Now, imagine if you set a goal like, “I will beat the final boss in 3 days!” Suddenly, you have a mission, a reason to play, and every step becomes exciting. Life is like that, man. If you say, “I want to get 90 marks in science,” you will now get through chapter by chapter, just like beating levels in your game. But if you say, “Anything will do,” you will get through nothing. So, goals make life fun, challenging, and meaningful – just like leveling up in your favorite game. Keep dreaming, keep planning, and remember, every goal is like a little magic that is easy to enjoy, but so fulfilling!
👉 Hidden Call to Action: Write down your dream. Whether it’s a car, a vacation, or early retirement, make it real by seeing it every day. 📝✨
Falling for Get-Rich-Quick Schemes
😱 “Double your money in 21 days!”
Imagine—one day you are relaxing and someone comes up to you and says, “Son, just do this little thing and you will become a millionaire!” It sounds tempting, right? But wait! Get-rich-quick schemes are like those dumplings that look great but sometimes they are stale water—great on the outside, rotten on the inside. These are tricks that promise you instant money and luxury without much effort, but in reality, they are mostly scams. People fall for them because they are excited about getting rich quickly, but they end up losing their hard-earned money. It’s like you think eating ice cream will give you six-pack abs—yes, sweet dreams but in real life, it takes hard work! So, remember, if something sounds too good to be true, chances are it is fake just like your “forward this message and get Rs. 1000” WhatsApp chain.
Example: So, once there was a boy named Rahul in our colony. One day, an unknown uncle told him, “Son, just invest Rs. 500, and you will get double the money in a month!” Rahul got so excited! He gave all his birthday money to the uncle, and dreamed of buying a new bicycle. But what do you know? That uncle disappeared faster than mom’s samosas at the party! Poor Rahul was left with no bicycle and a big lesson- easy money is not always real money. So, the next time someone promises you a “rain of money”, think twice. Hard work and patience is the real treasure, got it?
👉 Hidden Joke: Why don’t we trust cheetahs with money? Because they’re always trying to make a “fast buck”! 🐆💸
Ignoring Inflation
🔥 “Value of money, fall!”
My dear, imagine you have a Rs. 10. Today it gets you a chocolate, but next year it will only get you half the chocolate for Rs. 10. Why?
Because prices keep rising—that’s called inflation! Now, if you pretend that inflation is not happening, you will make a mistake in understanding the value of money in the future. It’s like planning to buy a new video game next year for the same amount as today—but when the time comes, the game will have become more expensive, and you will be disappointed.
Ignoring inflation is like saying, “I won’t pay attention to these rising prices,” but the world will change! Now if we save or invest without considering inflation, we go step by step into the future with powerless money, and dreams remain unfulfilled!
Small example: One day Ram saves Rs. 100 in his piggy bank, thinking that after a year he will buy a cricket ball. But a year later, his 100 rupees piggy bank still has the same amount, but the price of the cricket ball has gone up to 120 rupees! Now Rohan’s 100 rupees is like an old phone without any updates – it will work, but it will not be of much use. This is what happens when we ignore inflation – we think the money is the same, but in reality, it becomes less valuable! Do you understand now? 😊👉 Hidden Action: Look for investment options with higher returns, like mutual funds or stocks. Think ahead, fight inflation! 🥊
Putting All Eggs in One Basket
🥚 “Invest all the Money in one Scheme.”
Well, imagine this: you have a basket, and it’s full of eggs that you’ve carefully collected. Now if you put all the eggs in one basket and accidentally drop it, what happens? All the eggs will break, right? That’s the idea behind the saying “putting all your eggs in one basket.” It’s a way of saying: don’t put all your hopes, efforts or resources into just one thing, because if it fails, you’ll be left with nothing. Always have a backup plan in life, like a Plan B or Plan C! It’s like telling yourself, “Don’t bet everything on just one race – spread your chances to be safe.” Smart, right?
Now, let’s look at an example: your exams are coming up, and instead of preparing for all the subjects, you focused on just Math’s, thinking “This is easy, I’ll top.” But when the results came, Math’s scored full marks, but you failed the rest of the subjects! You put all your eggs in one math basket, and now you’ve got a big surprise in the results basket! The lesson? Spread your efforts across subjects – or in life, across different opportunities – so that even if one thing doesn’t work, you have something else to fall back on.
So, got it? Never rely on one basket in life. And yes, even if you have one basket that falls, at least some eggs will be safe! 😊
👉 Hidden Pro Tip: Diversify! It’s the superhero cape your money needs to stay safe. 🦸♂️💰
Following the Crowd Blindly
🐑 “If he is doing it, Why I will do it too!”
Imagine you are in a game of hide and seek. Everyone runs and hides behind the same tree because one person said, “This is the best place to hide!” You run there without thinking, but guess what?
The seeker finds everyone very quickly! This is what “blindly following the crowd” means – when we just copy others, without thinking. Sometimes in life, the crowd can be wrong, or their idea may not work for you. Just because everyone is doing something doesn’t mean it is the right thing for you. You have your own brain and heart, so use them!
Always think: “Is this really right, or am I just running after everyone?” And yes, blindly following the crowd is like wearing your friend’s slippers – it may fit them perfectly, but may be uncomfortable for you!
Example: Once a boy, Rohan, started making a project for the science fair with his class. Everyone was building a volcano because “it looks cool.” Rohan thought, “Let me make one too.” But Rohan knew he loved coding, and wanted to build a robot that danced. He didn’t follow the crowd and built his own robot. Everyone was impressed at the science fair, and Rohan won first prize! See? If Rohan had listened to everyone, his unique talent might never have been discovered. Moral of the story: Don’t follow the crowd; be the hero of your ideas! 🎉
👉 Hidden Call to Action: Be a lion, not a sheep. Roar with confidence in your own choices! 🦁
Not Having an Emergency Fund
🚑 “What will do Now?!”
Brother, imagine you’re playing a video game and suddenly your game character gets killed by a surprise monster. What do you do? You go to your reserve of “spare lives”, right?
Well, that “reserve” is like an emergency fund in real life! When we don’t have an emergency fund, it’s like playing the game without any extra lives. If something unexpected happens – like your phone breaks, you lose your wallet, or there’s a sudden doctor’s bill – you may have no choice but to panic and borrow money from someone or take out a loan.
Life doesn’t warn you before these things happen, so it’s important to have some money saved for these “game over” moments. Without that backup, it’s like driving a car without a spare tire; if one tire blows out, you’re screwed!
Example: Let’s say you’re walking down the street, enjoying the sunshine, and suddenly – bang! Your shoes blow out. Now, if you have an emergency fund, you can buy a new pair without worrying. But if you don’t, you might return home barefoot and look kinda weird. 🤦♂️ Imagine your friend looks at you like that and asks, “Dude, where are your shoes?” You’d say, “Dude, I didn’t have an emergency fund to fix that!” 😅 So, having that emergency fund is like being the superhero of your own life – always be prepared for those surprise moments, whether they’re big or small!
Golden Rule: Keep 3-6 months’ expenses in a separate savings account. This is your safety net—only for emergencies!
👉 Hidden Joke: Emergency funds are like that one friend who always carries extra snacks. You’ll thank them in a crisis! 🍟😂
Overthinking and Delaying Investments
🤔 “There is time now, we will do it latter.”
Well, imagine you are at the ice cream shop and you can’t decide which flavor to get. You think about it for hours—chocolate, vanilla or maybe strawberry? You even start imagining what your friends will say about your choice and suddenly, you are stuck. This is exactly what overthinking is. When we overthink, we get so caught up in trying to make the right decision that we end up making no decision at all! It’s like waiting for a train, but you are so busy reading the train schedule that you miss the train. Overthinking makes things more difficult than they need to be. It prevents us from taking action, especially when it comes to things like investing money. You can spend so much time thinking, “What if I lose money?” that you forget: sometimes, not taking action is the biggest risk.
Let’s say you have saved ₹1,000 and you are thinking about investing them. You know you can put it in a safe place like a fixed deposit or maybe stocks, but you keep waiting for the “right” time. You overthink everything—will the stock market go up? Will it go down? By the time you analyze every possibility, ₹1,000 just sits in your bank account. Months later, you realize it has grown only a little from the interest—barely enough to buy a chocolate bar! Meanwhile, if you had taken the risk and invested earlier, it could have grown even more. So, remember: sometimes, it’s okay to pick a flavor and enjoy the ice cream instead of thinking too much about it!
Fun Fact: Investing ₹1,000 at age 20 could grow more than ₹5,000 invested at age 30. Time is your best friend in investing!
👉 Hidden Action: Start now! Open a savings account, try a mutual fund SIP, or buy your first stock. Small steps count. 🪜
Forgetting to Learn
📚 “I know everything!”
Friend, what does it mean to ‘forget to learn’? It is simple! Many times, it happens that we learn something new, but after some time we forget it. Like you once remembered the date of your friend’s birthday, but then suddenly forgot it. This is ‘forgetting to learn’. Learning is important for all of us, but many times we just remember things instead of understanding them. If we learn things by understanding them, then we will never forget them! Like you had to remember a difficult formula of mathematics, but you just memorized it, then after some time you are not able to remember the formula completely, right? But if you had learned by understanding that formula, you would have remembered it in every test of life!”
Example: Suppose, once you had to play a fun game in which you had to remember the names of animals. You remembered their names over and over for a few days, but you did not understand anything about them, like what is the favourite food of those animals, what is their specialty. When questions about those animals came to your mind while playing the game, nothing came to your mind, and you lost the game. If instead of memorizing the names of the animals, you had to remember their names over and over again, you would have understood their names over and over again. If you had learned it with a small story or picture, all those things would have come to your mind very well and you would have won! So, learning is more than just memorizing, understanding is important. 👉 Hidden Joke: Why did the penny go to school? To make more “cents”! 🪙🎓
Wrapping Up: Your Money, Your Future
Buddy, money isn’t just about numbers. It’s about freedom, dreams, and happiness. Every rupee you save or invest today is a step closer to the life you want. Sure, mistakes happen—we all learn from them. But with these tips, you’re already ahead of the game!
Remember, saving and investing is like planting a tree. Water it with care, give it sunlight (patience), and let time do its magic. 🌳✨
So, what are you waiting for? Start your journey today! Even small steps count—open that account, set a goal, or save a little extra. Future-you is cheering for you already! 🥳
Frequently Asked Questions (FAQs)
Q. What are the most common mistakes people make when saving and investing?
A :-People often make mistakes such as spending everything without saving, ignoring the power of compounding, falling for get-rich-quick schemes, and putting all their money into one investment. These errors can lead to financial setbacks and missed opportunities for growth. Understanding these pitfalls and avoiding them can help you secure a better financial future.
Q. How does compounding work and why is it important for saving money?
A :- Compounding refers to the process where your money earns interest, and that interest also earns interest over time. Starting early and allowing your savings to grow exponentially can result in a large sum in the long run. Ignoring compounding means missing out on the magic of growing wealth over time.
Q. Why should I set financial goals?
A :- Setting financial goals gives you direction and purpose with your savings and investments. Without clear goals, you’re like a player in a game without a strategy, and you may end up wasting resources without achieving anything meaningful. Having specific goals helps keep you focused and motivated to save and invest wisely.
Q. How can I avoid falling for get-rich-quick schemes?
A :- Get-rich-quick schemes sound too good to be true, and often, they are. They promise huge returns in a short period but are typically scams or unsustainable. Instead of chasing easy money, focus on consistent savings and making informed investments. Research and be skeptical about offers that sound too good to be true.
Q. What is the best way to diversify my investments?
A :- Diversification means spreading your investments across different asset classes (stocks, bonds, mutual funds, etc.) to reduce risk. By not putting all your money in one place, you can ensure that if one investment loses value, others may still perform well, protecting your overall portfolio.
Think of one financial step you can take today. Got it? Great! Now go do it. You’ve got this, and I’m rooting for you.
Also read this
No-Spend Month Made Easy at 2025: The Ultimate Guide for Beginners to Save Big Without Stress.
Top 8 side hustle ideas to make money from home: Simple and creative ways to earn extra money.
What Struggles or Victories Have You Experienced When It Comes to Saving Money?
Very helpful and informative.
Thanks.