17 Things You Should Never Do With Your Money

17 Things You Should Never Do With Your Money

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Statistically, for the majority of fiscal 2021, Indian families’ savings—including investments, bank deposits, and cash — remained higher than 13% of GDP (pdf), compared to roughly 11% in each of fiscal 2019 and fiscal 2020 as reported by Motilal Oswal The Economy Observer in 2021.

While there is no shortage of lessons on the “must-dos” with money, more often than not, we neglect the fact that doing certain activities with your money could endanger your financial stability.

Financial Blunders to Steer Clear of 17 Money Mistakes to Avoid

1. Never fall for deals you cannot afford

On any given day, our phones are bursting with promotional, money-related offers. We fail to see through some that are not genuine. Later, we realized that we ended up paying more than expected. Always double-check deals and offers before you decide to go ahead.

In many cases, the promotional rates last only a year or two, and we pay retroactive interest based on the loan amount. A retroactive interest rate increases the amount of interest owed and, eventually, the amount we spend on the item.

2. Never donate money over the phone

We receive many genuine requests on our phones from charities and NGOs. Unfortunately, phone solicitations can also be from scammers. Do not make any donations over the phone. Request information by email to research further before making any transaction.

3. Never co-sign for a loan that you cannot afford

If you do not have the means to pay back someone’s loan, never co-sign a loan. There may be times when the other partner cannot make the repayment. You will have to make the payment on their behalf if they do not.

4. Never spend your full salary

As soon as salary is credited into our account, there is an urge to spend money without first planning the monthly budget. We must follow the 50–30–20 rule with our money. Use 50% of your income on essential expenditures, and 30% on non-essential expenses, and save the remaining 20%.

5. Never travel only with cash

Yes, using cash instead of letting our credit card bills increase is a good idea, but not when we are on vacation. Chances are that we might lose our belongings or someone might steal our money since such incidents are common in tourist spots. We should plan how much we can spend via our credit cards to avoid huge credit card debt.

6. Never indulge in emotional spending or sale purchases

Honestly, end-of-season sales do more harm than good. We often buy items that only pile up in our storage space. The other problem is spending money to make ourselves feel better. It is a moment of solitary joy but months of monthly budget cuts afterward.

7. Never buy a house without looking at the total cost

Buying a home is not just repaying the home loan. It comes with added costs, such as repairs, renovations, lifestyle purchases, and an additional burden on our existing debts. We should check the full cost of the house and look for hidden expenses before plunging into home ownership.

8. Never follow financial advice blindly

The pro tip is to look for expert advice and do ample research before following financial advice. What works for me might not work for you because our incomes and goals differ. Hire financial advisors to take care of your investments and savings rather than relying on information from friends and family. It is not that they would misguide you, but financial advisors have the skills and data to offer real-time advice to help you reach your financial goals.

9. Never invest everything in illiquid assets

Real estate is the most common example of illiquid assets. Houses, cars, antiques, private company interests, etc., cannot be quickly or easily converted into cash for their fair market value. Hence, we should be cautious about putting all our money into such assets.

10. Never lose sight of your finances

Without a planned monthly budget, we will always be that person who often says: I don’t know where my money goes. We have access to many digital financial planners and expense trackers, which we can use to manage our money prudently. We should keep a close eye on our finances and budget. Also, we must avoid mixing our long-term and short-term financial goals.

11. Never buy large stocks or shares in one company

Investing more than 20% of our funds in a single company stock is risky. If the company goes through a bad patch, we can lose a substantial amount.

12. Never share your financial earnings on social media

How much we earn and what we do with our money should not be publicized over social media. Posting these things on social media could invite scammers or even put you at risk of theft.

13. Never sign a contract without understanding it

Many of us lazily sign contracts and agreements without understanding the terms and conditions. If we don’t know what we are agreeing to in a new project or assignment, we might end up being financially stagnant for a long time.

14. Never leave money in your account for too long

If you have the habit of letting money stagnate in your account, consider choosing investments that can provide good returns. Every rupee from our income should be accountable. We should give up letting the extra amount of money stay in the account until the next salary. Instead, divert the extra cash to an emergency fund, pay off credit card debt in advance if you can, open another savings account, or even invest in mutual funds or government-approved pension schemes.

15. Never buy a new car

A brand-new car loses 9–11% of its value the moment we drive off the shop. A used car is a better choice for first-time buyers—it has cheaper insurance and slower depreciation.

16. Never settle the wrong debt first

Debt with the highest interest rates, such as credit cards, should be paid off first before debt with lower rates, such as mortgages.

17. Never live above your means

In this day and age of doing things for a shiny public image, many young adults are drowned in debt. We should avoid indulging in expenses that make us look good but empty our savings accounts. The key is always to have an affordable lifestyle or gradually upgrade your life. Saving money and investing in retirement savings should be our priorities.


Now that we know what not to do with our money, it is a good time to start looking at ways to invest and save. Creating a budget that helps us achieve our financial goals is essential. Also, we never know when a family member might need urgent medical attention. So keeping money aside in an emergency fund is also a wise decision. Also, settling credit card debt as soon as possible is important so that piling interest rates don’t affect our savings.

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What can I do with the extra money in my account?

Every dime that we have should have a purpose. All extra money should be diverted to savings and investment opportunities based on our future needs.

Should we save money in the bank or as cash?

If we keep cash, we are not generating interest on it. It is advisable to keep the money tucked away in a savings or fixed-deposit account where it will earn interest.