Are you suffering from any of these financial diseases?

financial-doctor

Do you need a Financial doctor?

Effective money management needs proper planning and application of that planning in right time. Sometimes general people with lack of financial knowledge fail to manage their money properly. This fear of failure in money management makes many financial phobias and maniacs. Mostly women (23% of women and 18% men) and younger people (between 16-24 years and up to 40 years of age) suffer from this type of financial ailments.
Here, I’ve discussed such interesting phobias and maniacs. Check and take preventive measures as discussed below if you have any of these financial diseases.

1.Cashomania:

Symptoms:

This type of patient loves to hold cash in hand or in their savings bank account. If they find less amount of cash with them then try to withdraw money from other invested area. They feel insecure to invest money in instruments which give higher returns.

Prognosis:

Opportunity of holding cash in hand or in savings bank account is high and this can impact your goals. Suppose, if you have $25,000 in your savings bank account then it will attract only $1000 in a year even with an interest rate of 4% p.a. But if you put $10,000 in bank account and invest the rest in some balanced mutual fund then your total return may be:-
Interest from savings bank account (@4% p.a.) $400+ Return from balanced fund (@10% p.a.) $1500=$1900
The amount is almost double from the previous case.

Remedy:

Try to put minimum amount and rainy day fund in your bank savings account and invest the remaining amount in different investment vehicles as per the needs, risk appetite and different goals timings.

financial diseases

2.Inflationobia:

Symptoms:

This type of patient forgets the inflation factors while calculating corpus for long term goals. As a result, their planning shows the highest possibility of achieving their goals easily.

Prognosis:

Inflation erodes value of money in longer period of time. Even with average 6% inflation rate can cut the purchasing power of $10,000 to $4000 in only 15 years. So, the plans may collapse. Moreover the rate of inflation is applied in compounding basis – with higher impact.

Remedy:

Make a regular check on inflation rate and keep the reports handy with you while planning for your future financial goals.

3.Papyrusphobia:

Symptoms:

Fear of financial paper work. Blood pressure of these of patients shoots up while filling up forms, reading the documents, filing tax returns, renewing insurance policies, and doing other types of financial paper works.

Prognosis:

Make monetary loss, choose wrong investment product due to less research on the returns and risk and create other financial problems due to less paper work.

Remedy:

Keep a day of a week for doing necessary paper work. If you keep your paper works up to date then no extra pressure will be on you and in this way you’ll be get rid of from this very common phobia.

4.Midusmania:

Symptoms:

This type of patient suffers from cravings of gold and real estate properties without concerning their financial health.

Prognosis:

Physical gold and real estate properties are illiquid in nature. On the other hand, price of real estate properties depend on various factors, one may not be able to sell his properties in sudden need of cash. Holding too many this type of assets may hamper your other goals.

Remedy:

Maintain a balanced portfolio. Consult with any financial doctor (planner) for optimum asset allocation as per your financial health and goals.

5.EMIonia :

Symptoms:

This type of patient love to buy all the possible household and electronics items on EMI option. Whenever they find a new item like new TV, mobile even new car with easy EMI option, they forget their current financial status and jump to grab the item.

Prognosis:

EMI option may look very attractive but think the situation when more than 5 EMIs are going on your account. Most of the money goes out to pay the EMIs from your salary in the beginning of the month. You have to maintain your family with the left out money but you can’t because you are already suffering from the disease called EMIonia.
As a result, you forced to take loan or make excessive use of credit cards and your disease reaches the next level called debtolysis.

Remedy:

You have to take 2 medicines or precautions.
a.Make a budget with all the necessary items and sufficient investment option. Make auto transfer system to pay the utilities bills and invest in different funds. Now you are left with little money to pay the grocery, transport and other necessary monthly expenses.
b.Stay away from online shopping and product review websites for at least 6 months. Do enough research at least for 10-15 days before buying any new expensive product. This waiting time may keep you away from impulsive buying.

6.Debtolysis

Symptoms:

These types of patients are generally over spender and take too many loans, like credit card debt, personal loan, vehicle loan, etc.

Prognosis:

Budget may face serious problems due to income-expense imbalance. Financial goals may hamper due to lack of funds as most of money will wash off for heavy interest payment.

Remedy:

Follow the budget. Never ever take debt more than your 40% of your income. Follow the credit diet as prepared by your financial doctor.

7.Insuranceosys:

Symptoms:

This type of patient buys insurance without enough research. They buy only traditional endowment insurance policies and ignore the low return and insufficient cover that these policies provide. The maturity benefit is not rewarding for these types of policies either.

Prognosis:

Family and finances may be in problem. Long term goals may hamper because a heavy amount of money which could earn higher return tied up in these plans.

Remedy:

Follow an insurance diet plan. Take a term insurance to cover the family and invest surplus amounts in other investment vehicles for higher returns.

If you are suffering from any of these financial illness then don’t wait anymore. Follow the preventive measures as discussed above. If the problem is very serious then don’t hesitate to consult any Financial doctor.

Wish you a happy and healthy Financial future!


About Moonmoon Biswas

Moonmoon Biswas is an Equity research analyst . She has more than 10 years of experience in this field. She has proven track record in the field of Technical analysis and the Fundamental analysis. From the educational background, She is an MBA-Finance with CFA (India). She has work experience in the leading broking houses in India and has also in hand experience in Australian Security Market. She has her own equity research firm and currently also engaged in digital marketing.

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