When it comes to personal finance, there are some decisions which I am not really proud of. They are my personal finance mistakes.

They still cost me, as you have guessed it. Let me share here one by one so that you can learn and avoid them.

1. Neglection of Emergency Fund

I learned the importance of an emergency fund in a hard way. When I got into the job, my YOLO mode was ON.

I did not care saving for rainy days. I spent all my money as if there is no tomorrow, basically.

One evening I received call from the village informing me my father was critically ill and was referred to hospital.

I didn’t have any money to immediately leave Thimphu. I asked many of my friends and relatives if they would lend me money.

No choice, I took Nu.150,000 bank loan. If were prudent with my money and started saving, I won’t have had this problem.

It was terrible. Taking loan even for such thing was the most humiliating experience. 

I have realized my vulnerability without an emergency fund. So I started building it. 

2. Keeping Money in Fixed Deposit

Sometimes in 2019 I could save quite a good amount of money from my regular salary.

The best thing to do with it would have been investing somewhere for a better return. I was too lazy. 

Instead, I locked it for 5 years in a fixed deposit account which gives 8% yearly interest for it. 

When inflation is soaring and has increased by 4.97% in 2021 alone, the net return of my FD is just a peanut.

It will mature in 2024 end. If I withdraw now, I will receive just a principal amount – a huge loss again.

To make it even worse, that Fixed Deposit amount represents about 25% of my total net worth.

3. Lending Money to Friends

If your friends or relatives want to borrow money from you, do not give it. Never lend your money!

You lend only if you can afford to write off. It’s not that they won’t pay it back but what if they don’t? 

Trust me on this. When you lend money, how we look at your friends or relatives change. 

It is a contract based on trust. But trust is an expensive thing especially when money is involved. 

I can’t call him like before because I feel it might make him guilty of not paying back my money. 

He also doesn’t call me or chat me like before. Maybe he is guilty or just worried I might ask him to return it. 

Overall, our friendships deteriorated. You’ll not only lose your money but also a relationship.  

4. Not investing Sooner or Earlier

We know this popular Chinese proverb: ‘The best time to plant a tree was 20 years ago. The second best is now.’

When it comes to my investing, the best time would have been since the day I joined my job.

If I had done few years ahead, I won’t be laughing to the bank but my net worth and portfolio would be much better. 

35% of my net worth is in investment now. It’s not even at the minimum international recommendation rate of 50%.

Once it is started, I have to keep my money mindset in check and let my money grow. Simple. 

They cost me. Hope you won’t fall for these financial mistakes as you seek financial freedom. 

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